Tags: Rosengren | QE | housing | economy

Boston Fed’s Rosengren Might Support QE Pullback Later This Year

Tuesday, 16 Apr 2013 08:52 AM

By Dan Weil

Boston Federal Reserve Bank President Eric Rosengren sees signs of life in the economy, and if that continues, he might be willing to support a slowdown in the Fed’s quantitative easing (QE) program.

Rosengren’s views are significant, because he’s one of the central bank’s dovish policymakers, and he’s a voting member of the Federal Open Market Committee.

The Boston Fed president expects the economy to grow 3 percent in the first quarter, slow down a bit in the second quarter and then return to 3 percent growth for the rest of the year, he tells The Wall Street Journal.

Editor's Note: The Final Turning Predicted for America. See Proof.

If the economy matches that forecast, Rosengren says he could support a lessening of the Fed’s QE around the end of the year. The Fed is currently buying $85 billion of Treasurys and mortgage-backed securities a month.

"I'm reasonably confident we can get a pretty good outcome by the end of the year if we don't get some negative shocks along the way," he said. "I was a pessimist, so this is a change."

He still sees obstacles, such as the paltry jobs growth in March and Europe’s financial woes. But Rosengren likes much of what he sees in the economy this year.

Housing is one area of strength. "I haven't seen a truck with lumber on it for five years, and in the last month I've seen three in my neighborhood," Rosengren says. "People are starting to build and purchase new homes."

Minutes of the Fed’s March meeting indicate some policymakers see a pullback — perhaps a full pullback — in QE this year.

"A few" favor shrinking QE around mid-year and ending it later in the year, according to the minutes.

"Several others thought that if the outlook for labor market conditions improved as anticipated, it would probably be appropriate to slow purchases later in the year and to stop them by year-end."

Editor's Note: The Final Turning Predicted for America. See Proof.

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