Federal Reserve Bank of Boston President Eric Rosengren said that recent economic data warrants continued gradual interest-rate increases and policy makers could risk stoking a bubble in the commercial real estate market if they delay action for too long.

“If the incoming economic data continue to be consistent with gradual improvement in labor markets and inflation getting closer to target, the Fed should be ready to gradually normalize interest rates,” Rosengren said on Thursday in Concord, New Hampshire, according to the text of his prepared remarks.

Rosengren, a voter this year on the policy-setting Federal Open Market Committee, ran through recent economic readings that he said pointed toward continued gradual U.S. growth, including the April employment report, and then renewed a warning he voiced in November that low rates could encourage speculation in commercial real estate.

“Prices now exceed the peaks reached prior to the financial crisis, and are well above the levels reached in 2005 as real estate prices were beginning to accelerate before the financial crisis,” he said.

Fed officials will next meet June 14-15 in Washington to share their assessments of the economy and decide whether to raise rates for the first time since December. While several FOMC members have said a June hike remains an option, investors think otherwise. Prices in fed funds futures imply they do not expect a rate rise before December.

Market Pessimism

Rosengren repeated his belief that such market sentiment may be misguided.

“The market remains too pessimistic about the fundamental strength of the U.S. economy, and the likelihood of removing monetary accommodation is higher than is currently priced into financial markets based on current data,” he said.

He said he expects second-quarter growth to slightly exceed his estimate for the economy’s long-term potential growth rate, which he pegs at 1.75 percent. That should be enough to continue pushing down unemployment, while edging wages and inflation upward.

Previously viewed as favoring accommodative Fed policy and showing less concern for inflation than many of his colleagues, Rosengren has shifted his stance in recent speeches. In addition to warning about financial instability, on Thursday he called attention to the Fed’s poor record of correctly timing rate increases as unemployment bottoms out.

“Once unemployment has reached its low point in the economic cycle, it is unusual for it to proceed smoothly back to the natural rate,” he said. “The lesson is that policy makers should avoid significantly overshooting their best estimates of the natural rate of unemployment.”