Tags: Fed | Rosengren | Completing | 600 Billion | Purchases | easing | boston

Fed’s Rosengren ‘Fully’ Sees Completing $600 Billion Purchases

Tuesday, 16 Nov 2010 01:18 PM

Federal Reserve Bank of Boston President Eric Rosengren said he expects the central bank to buy the entire $600 billion of Treasurys policymakers authorized Nov. 3 in a bid to reduce unemployment.

“Given my forecast, I fully anticipate we will purchase the entire amount,” Rosengren, 53, said today in an interview with Bloomberg News. “Certainly if the economy were to weaken substantially and further disinflation were to occur, we should take more action,” and officials could also make “adjustments” if the economy turned out to be much stronger than expected, he said.

Rosengren’s remarks extend a defense of the program by Fed officials against critics outside the central bank and some inside. Asked about the rise in 10-year Treasury yields over the last two weeks, Rosengren said that “ideally” the Fed would like to see rates stay low, “but we don’t control all the things that affect these markets,” such as investor expectations for fiscal deficits in the U.S. and abroad.

The Boston Fed estimates the renewed large-scale asset purchases will help reduce the U.S. jobless rate by an additional 0.5 percentage point over the next two years, equivalent to adding 700,000 jobs, Rosengren said.

That would mean an unemployment rate at the end of 2012 of “around” 8 percent, “which means we’re still not where we want to be,” and inflation excluding food and energy may not be “dramatically different” than now, he said.

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Federal Reserve Bank of Boston President Eric Rosengren said he expects the central bank to buy the entire $600 billion of Treasurys policymakers authorized Nov. 3 in a bid to reduce unemployment. Given my forecast, I fully anticipate we will purchase the entire amount, ...
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Tuesday, 16 Nov 2010 01:18 PM
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