Despite recent improvement, "the economy remains far from where we would like it to be," and the slow recovery poses "significant costs," Federal Reserve Bank of Boston President & Chief Executive Officer Eric S. Rosengren said Tuesday.
Noting the Fed's taper of its bond purchase program, he said, the Federal Open Market Committee said accommodation reduction "would be gradual."
"I certainly believe that a very gradual normalization is very appropriate given that the unemployment rate remains unusually high and the inflation rate remains unusually low," Rosengren told a conference in Hartford, Conn., according to prepared text of his remarks, released by the Fed. "There are significant costs to a slow recovery. It poses great strains on unemployed workers (and their families) who might be returning to work more quickly if the economy grew faster. It can potentially have longer-lasting and structural implications for labor markets and the economy. There may also be an impact on the Federal Reserve's ability to reach its inflation target in a reasonable time frame."
He warned, "This recovery has already been too slow, and we do not want premature tightening of monetary policy to delay the return to more normal economic conditions."
