Eric Rosengren, president and chief executive of the Federal Reserve Bank of Boston, aimed to discredit four misconceptions about the Fed, including that further monetary policy actions will not help the economy.
“Central banking and monetary policy are not easy to explain, but the Fed could have done a better job of it,” Rosengren said, according to a prepared text released by the Fed. “It is unlikely that lower rates would have no impact on the economy,” he added.
Boston Fed research suggests “a sustained decline in the 10-year Treasury rate of 100 basis points would lead to a cumulative increase in real [gross domestic product] over two years of approximately 2.5%,” Rosengren said.
“With the reduction in interest sensitivity in housing more recently,” an extra 2% in GDP growth could be expected, he said.
