Tags: Rosengren | taper | jobs | economy

Boston Fed's Rosengren Supports Continued Gradual Tapering

By Dan Weil   |   Monday, 10 Feb 2014 10:43 AM

Boston Federal Reserve Bank President Eric Rosengren says he still supports a gradual tapering of the Fed's quantitative easing after Friday's weak jobs report.

He's not a voting member of the Fed's policymaking Federal Open Market Committee (FOMC) this year. The government reported Friday that the economy added only 113,000 jobs last month.

"I don't think it really changes much in terms of our perspective on labor markets. We still have labor markets that are improving gradually," Rosengren told The Wall Street Journal.

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"This validates the idea that we should only gradually be reducing accommodation because we are only seeing gradual improvement in the economy."

If more data come out showing slow economic growth, "there would have to be serious discussion" about whether to shift policy, he said. But one or two months of weak jobs statistics don't justify a change. Non-farm payrolls gained only 75,000 in December.

"We should be fairly slow moving until we get a better assessment," Rosengren said. "You want to have a consistent story across data series and across time."

The Fed has trimmed its bond purchases by $10 billion a month at each of its last two meetings, leaving the total at $65 billion. It next meets March 18 and 19.

Richmond Fed President Jeffrey Lacker, an alternate member of the FOMC, also doesn't think the central bank should pull back from its tapering.

"I think the hurdle ought to remain pretty high for pausing in tapering," he told reporters last week, Reuters reported.

"We linked the asset purchase programs to significant improvement in the outlook for labor market conditions, that has definitely occurred, and I don't see financial market developments as having affected the outlook for labor market conditions materially at this point."

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