Fed's Rosengren: Stimulus Needed as Supplement

Federal Reserve Bank of Boston president Eric Rosengren said yesterday that the prospect of further job losses and weakness in spending imply continued problems for the banking industry, and he suggested that fiscal stimulus needs to supplement monetary easing to help the economy.

Rosengren, in remarks prepared for a Global Risk Regulation Summit in Geneva, said there needs to be a return to normalcy in credit and housing markets.

He also set forth principles for reforming financial regulation so that the current financial crisis is not repeated.

After a 0.5% decline in third-quarter gross domestic product, “it looks like in the fourth quarter it will decline somewhat more significantly — since consumer and investment spending appear to be dropping quite precipitously,” Rosengren said.

— Market News International

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