Boston Federal Reserve Bank president Eric Rosengren suggested Wednesday he is leaning toward favoring renewed quantitative easing to stimulate the economy, bring down unemployment, and avoid further disinflation and possible deflation.
His support for quantitative easing occurred on a day when Philadelphia Fed president Charles Plosser and Minneapolis Fed president Narayana Kocherlakota publicly opposed such action. The dueling speeches illustrate the divisions at the central bank, which is charged with maintaining price stability and full employment.
Rosengren, a voting member of the policymaking Federal Open Market Committee, said it must be “open to implementing” policies promoting full employment and reducing disinflationary risks.
He predicted Fed purchases of Treasury securities would reduce both Treasury yields and other long-term interest rates.
By resuming quantitative easing, he said the Fed would lower market rates to levels they would have reached if the Fed were able to continue cutting the federal funds rate.
— Market News International