Federal Reserve Bank of Boston President Eric Rosengren said he expects US economic conditions to continue improving, making further rate increases appropriate, although it would be important to see whether a weak employment report for last month proves to be an anomaly.
“Lately the economic data have been choppy,” Rosengren said in the text of a speech prepared for delivery yesterday at a central banking conference in Helsinki. “However, I still expect sufficient economic growth to justify a gradual removal of accommodation.”
Federal Reserve officials are debating whether the economy is strong enough to handle what would be only the second rate increase in about a decade, and have said they would evaluate incoming economic data to help decide. The US Federal Reserve raised rates in December last year for the first time since 2006.
While weak job creation last month could give the Federal Open Market Committee (FOMC) pause when it meets in Washington on Tuesday and Wednesday next week, other signs suggest that the Fed is moving toward achieving its dual mandate of stable prices and full employment, said Rosengren, an FOMC voting member this year.
“Given that the labor market contrasts with the pattern in the first quarter, and the pickup in spending observed so far from other data, it will be important to see whether the weakness in this report is an anomaly or reflects a broader slowing in labor markets,” Rosengren said.
On prices, “while it is only a gradual progress, we are seeing some evidence of inflation moving toward the 2 percent inflation target,” he said.
The US economy created just 38,000 jobs last month, fewer than in any month in almost six years, a US Department of Labor report showed on Friday last week. What is more, many people dropped out of the labor market during the month, and a higher share worked part-time jobs for economic reasons. |
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