BOSTON: With U.S. core inflation still low and unemployment high, now is not the right time to think of tightening monetary policy, a top Federal Reserve said on Monday, March 28.
Eric Rosengren, president of the Boston Fed, said the U.S. economy was likely to grow in the first quarter at a pace similar to the 3.1 percent seen in the fourth quarter of 2010, and pick up somewhat from there.
Even so, growth is not strong enough to quickly bring down the jobless rate, now at 8.9 percent, Rosengren said at a panel on the economic outlook hosted by the Boston Globe and the University of Massachusetts.
"The stubbornly high unemployment rate is a real impediment," Rosengren said. "Ideally we want a much stronger labor market than we're seeing ... we really have a lot of slack in the economy."
Rosengren, reliably one of the most dovish members of the Fed, is not a voting member of the Federal Open Market Committee in 2011.
Rising gasoline prices are another headwind to growth, since many Americans will cut back on other spending to compensate for their pain at the pump, Rosengren said.
The Fed is closely watching supply shocks to commodities such as crude oil and wheat, where key producers such as Russia have had crop problems, but those trends are beyond the ability of the central bank to control, he noted.
But at 1.1 percent in the year through February, core inflation -- the rate that excludes food and energy -- was still below the Fed's informal 2-percent target.
That, said Rosengren, gives the Fed "flexibility." - Reuters
Eric Rosengren, president of the Boston Fed, said the U.S. economy was likely to grow in the first quarter at a pace similar to the 3.1 percent seen in the fourth quarter of 2010, and pick up somewhat from there.
Even so, growth is not strong enough to quickly bring down the jobless rate, now at 8.9 percent, Rosengren said at a panel on the economic outlook hosted by the Boston Globe and the University of Massachusetts.
"The stubbornly high unemployment rate is a real impediment," Rosengren said. "Ideally we want a much stronger labor market than we're seeing ... we really have a lot of slack in the economy."
Rosengren, reliably one of the most dovish members of the Fed, is not a voting member of the Federal Open Market Committee in 2011.
Rising gasoline prices are another headwind to growth, since many Americans will cut back on other spending to compensate for their pain at the pump, Rosengren said.
The Fed is closely watching supply shocks to commodities such as crude oil and wheat, where key producers such as Russia have had crop problems, but those trends are beyond the ability of the central bank to control, he noted.
But at 1.1 percent in the year through February, core inflation -- the rate that excludes food and energy -- was still below the Fed's informal 2-percent target.
That, said Rosengren, gives the Fed "flexibility." - Reuters
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