—Rosengren: Employment Remains ‘Well Below” Year Ago Levels
By Steven K. Beckner
(MaceNews) – Boston Federal Reserve Bank President Eric Rosengren advocated continued aggressive monetary and fiscal stimulus Friday.
Given unsatisfactory labor market conditions, he suggested, the Fed will need to keep buying $120 billion of bonds for the foreseeable future.
“Despite a potentially difficult road ahead over the next few months, monetary policy is quite accommodative, and fiscal policy has been and likely will continue to be forcefully deployed,” Rosengren told the Yale School of Management’s
Economic Development Club. “From my perspective, both the monetary and fiscal policy responses have been quite
appropriate, given the severity of the public-health-induced economic crisis.”
Referring to the Fed’s large monthly purchases of Treasury and agency mortgage backed securities, Rosengren said “these purchases will continue until there is substantially more progress in lowering unemployment and raising inflation.”
As it is, he suggested progress on unemployment falls far short of the mark. “Even though employment has generally been expanding since May, given the sharp declines in payroll employment in these industries last March and April,
we remain well below the employment levels we saw roughly one year ago.”
Rosengren, who is not a voting member of the Fed’s policymaking Federal Open Market Committee this year, noted that the broader U-6 measure of unemployment shows “labor market outcomes for Blacks and Hispanics since last February have been significantly worse than for White workers” and that “younger workers have also suffered disproportionately ….”
Rosengren also lent his support to fiscal stimulus.
“Importantly, fiscal policy is the most effective option when monetary policy has reached the lower effective bound for interest rates,” he said. “Fiscal policymakers have already taken significant action, and further actions are under discussion in Washington.”
“To my eye, policymakers have reacted aggressively to the current pandemic-driven economic situation and appear prepared to continue with additional fiscal and monetary policy actions as needed in order to avoid further
impairment of labor markets and the economy as a whole,” he added.