The Fed's failure to achieve either part of its dual mandate provides clear evidence of the need for "continuing highly accommodative policy by large-scale asset purchases," Federal Reserve Bank of Boston President Eric Rosengren said Friday.
"In the United States, we currently have an unemployment rate of 7.6 percent and an inflation rate of 1.3 percent using the personal consumption expenditure (PCE) price index. Falling short on both elements of the Federal Reserve's dual mandate from Congress - inflation and employment - provides a strong rationale for continuing our highly accommodative monetary policy," he said at the Bank's economic conference, according to prepared text of the remarks, released by the Fed. "With inflation at 1.3 percent, and with my own forecast that inflation will remain well below our 2 percent target over the next two years, one could argue that consistently missing our inflation target alone would justify a highly accommodative policy. However, coupled with persistently high unemployment, the justification for continuing highly accommodative policy by large-scale asset purchases is clear. This is a time when the dual mandate is important and, I would add, particularly useful for communicating policy to the general public."