Eric Rosengren, President of the Boston’s Federal Reserve Bank, said that the central bank and the government should continue its pro-growth economic policies until a self sustaining recovery is assured.
In a recent speech to a business group in Boston, Rosengren said, “It is important that monetary and fiscal policy continue to support the economy until private-sector spending has resumed, and until we are confident that the recovery will continue once the programs that have supported the economy over the past year are removed.”
Rosengren, along with the other members of the Federal Reserve’s board of governors, will vote on the central bank’s interest rate policy next year. Rosengren cited the example of Japan in warning of removing supportive growth policies too quickly. He stated that higher unemployment rates have the potential to decrease inflation and that growth will not be fast enough to improve the labor market in the immediate future.
Rosengren said that the Federal Reserve’s goals should be for the economy to grow to the point where unemployment declines substantially and for inflation to settle at a rate of near 2%.
“The unemployment rate is going to remain high far longer than I would like,” Rosengren said in response to a series of questions. “I’d like policy to try to stimulate the labor markets as much as possible. But the reality is even with stimulated labor markets, we’re likely to see elevated unemployment for the next couple of years.” It was announced today that the unemployment rate hit 9.8%, the highest since 1983.
