Rosengren: Winded Economy Needs More Juice From Fed
Boston Federal Reserve President Eric Rosengren pressed his call for more action from the Fed to jumpstart a moribund U.S. economy, warning that higher unemployment and lower growth were likely without a bigger monetary policy boost.
“If you’re treading water, even if you’re a good swimmer, at some point you need to get to land,” Rosengren said Tuesday in an interview with CNBC’s “Squawk Box.” Rosengren is not a voting member on the Fed’s Open Market Committee(explain this) this year.
The sluggish pace of growth in the first half of the year augurs poorly for the second, Rosengren said. “My expectation is that the second half of the year won’t be much better,” he said, adding that in the absence of a new round of “open-ended” quantitative easing(explain this),or QE, the jobless rate could rise further from the current 8.3 percent in July.
Although the economy added more jobs than expected last month, growth has faltered since the end of 2011. He said relatively tame inflation gives the Fed more room for maneuver.
A third round of QE should be one of “sufficient magnitude” and linked to the economy’s performance, Rosengren said. Despite his sober assessment of the economy, the central banker did note signs of improvement in the housing market.
"We're starting to see some legs in the housing market," he said, partly because of the Fed's cheap money policies.