The economy is still weak and recovery showed only a brief flash of adequacy, so the United States must keep monetary policy accommodative until labor markets improve, Federal Reserve Bank of Boston president and chief executive officer Eric Rosengren said Wednesday.
But he sees stronger growth in the third quarter, with second-half gross domestic product between 3.0% and 3.5%.
“While this represents an improvement from the first half, it is still quite slow given the amount of slack in the economy, and slower than I had expected at the beginning of this year,” Rosengren told a forum at Clark University in Massachusetts, according to prepared text of his speech released by the Fed.
The Boston Fed president called last week’s employment report “dismal” and said “significant downside risks” remain, since the economy is improving very slowly.
“With fiscal austerity slowing down economies both here and abroad, it will in my view be important to maintain sufficiently accommodative U.S. monetary policy so that national labor market conditions can improve,” according to Rosengren.
