Federal Reserve Bank of Boston President Eric Rosengren said the central bank should spur growth and cut unemployment by prolonging a program that lengthens the average duration of bonds on its balance sheet.

Continuing so-called Operation Twist beyond this month would help the Fed meet its congressional mandate to ensure full employment, Rosengren said in an interview with Bloomberg News.

“That would have the impact of helping to reduce longer- term interest rates without expanding our balance sheet,” Rosengren said yesterday. “If you were looking for something that would promote growth but didn’t have an impact on our balance sheet, then certainly extending the maturity extension program would be a viable way forward.”

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Fed policy makers are scheduled to meet June 19-20 following reports the economy grew 1.9 percent in the first quarter, less than initially estimated. The Labor Department will probably report today that the unemployment rate in May persisted at 8.1 percent, according to the median in a Bloomberg News Survey of economists.

Rosengren said that given his outlook for weak growth and no improvement in the unemployment rate, an extension of Operation Twist “would be a positive step that would provide some additional support to the economy and hopefully promote somewhat more rapid growth overall.”

To help lower unemployment and boost the economy, the Fed cut its benchmark interest rate to near zero in December 2008 and purchased $2.3 trillion of securities in two rounds of large-scale asset purchases.

Balance Sheet

The central bank started Operation Twist in September to reduce longer-term interest rates without expanding its balance sheet. Under the program the Fed sold $400 billion of Treasury securities with maturities of three years or less and used the proceeds to buy $400 billion of Treasuries with maturities of six years or more.

The Boston Fed Chief said any new accommodation would hinge on the Federal Open Market Committee reaching a consensus. Also, the form of any easing would “partly depend on how the consensus formed.”

A second Operation Twist would be “limited in scope because it’s limited by the amount of securities we hold,” he said. “If you want to do something more substantial, then you would have to do it through greater clarity on communication or expanding the balance sheet,” he said.

The yield on the 10 year Treasury fell yesterday to a record low 1.56 percent, while U.S. stocks capped the worst monthly drop since September, following reports on the economy that were worse than economists’ expectations.

Further Reduction

Low interest rates are not a barrier to easing because a further reduction in borrowing costs would still spark growth, Rosengren said.

A report yesterday showed initial jobless claims increased to 383,000, above the 370,000 expected by economists in a Bloomberg Survey. A gauge of business activity from the Institute for Supply Management Chicago Inc. fell to 52.7, the lowest reading since September 2009. Economists had expected a reading of 56.8 on the index.

Weaker economic reports prompted Rosengren’s calls for further monetary stimulus, he said, citing his decision to advocate additional easing in a May 30 speech in Worcester, Massachusetts.

“We now know that our best estimate of first quarter GDP growth was pretty weak,” he said, and reports on the labor market have been “quite weak.”

“We’re not actually picking up steam and some of the growth we were seeing at the beginning of the year might reflect more the unusual weather patterns,” he said.

Rosengren, 54, was formerly the head of banking supervision and regulation at the Boston Fed and became its president in 2007. Fed presidents rotate voting on monetary policy, with Rosengren next holding a seat in 2013.