NEW YORK - Federal Reserve Bank of Boston President Eric Rosengren said the central bank should act to bring down “stubbornly, and unacceptably, high” joblessness that’s been stuck near 9 percent or above since April 2009.
“Given the very weak labor market conditions and the low expected inflation rate, the Federal Reserve should in my view continue to take action to aggressively try to reduce the stubbornly high U.S. unemployment rate,” Rosengren said in the text of remarks given in Boston Monday. He forecast inflation will be below 2 percent “over the next several years.”
The central bank may take new steps to boost growth, such as buying mortgage bonds or changing the way it communicates its policy goals to the public, Fed Chairman Ben S. Bernanke said after the Federal Open Market Committee’s two-day meeting ended Nov. 2. Policy makers last week left unchanged their plans to lengthen the maturity of the Fed’s bond portfolio, known as Operation Twist, and to keep the target federal funds rate near zero through at least mid-2013 as long as unemployment remains high and the inflation outlook remains “subdued.”
“The Federal Reserve should continue to use the tools at its disposal to boost demand in the economy,” Rosengren said, without specifying what steps should be taken.
“The Federal Reserve has taken unprecedented actions to improve the growth rate in the economy,” Rosengren said. “But economic ‘headwinds’ -- stemming from the previous financial crisis and concerns about possible future financial shocks -- have meant that despite Federal Reserve actions, economic growth has been lethargic and job growth has been too slow to make significant inroads into reducing the unemployment rate.”
The U.S. jobless rate unexpectedly fell in October while employers added fewer workers than forecast. The unemployment rate declined to a six-month low of 9 percent from 9.1 percent, even as the labor force grew. The 80,000 increase in payrolls followed gains in the prior two months that were revised up by 102,000, Labor Department figures showed last week in Washington.
Rosengren said the central bank “cannot do it alone” and that the federal government must also help. “It is also important for international policy makers to take actions that provide more stable world markets,” he said.
Education also plays an “important role” in the economy and “we would do well to work on addressing any impediments to students getting the employment opportunities that will serve them, their communities, and the macroeconomy,” Rosengren said.