BOSTON — Concerned about the still-high number of Americans working part time for economic reasons, the president of the Federal Reserve Bank of Boston on Wednesday called for a “patient approach” to tightening the central bank’s stimulative monetary policy.
“While the [U.S.] unemployment rate has recently fallen to 6.6 percent, there remain 7.3 million Americans who want full-time work but are currently working part time,” Eric Rosengren said in a speech to the Boston Economic Club, according to his prepared remarks.
Rosengren also cited the 6.6 percent unemployment rate and low inflation expectations as further reasons for patience in removing the Fed’s so-called accommodative monetary policy.
And he said the U.S. jobless rate, which has fallen in recent months, “probably understates the degree of slack remaining in labor markets and the economy more generally.”
Rosengren has been a consistent advocate for the Fed’s stimulus efforts. In December, he was the lone dissenting vote on the Fed’s decision to begin to taper monthly bond purchases. The central bank has since reduced its monthly purchases further, from $75 billion to $65 billion.
The Fed has also maintained extremely low interest rates — near zero percent.
As The Wall Street Journal reports: “The current jobless rate is now within spitting distance of the 6.5% threshold Fed guidance indicates will cause central bankers to start considering rate increases.”
But in his speech Wednesday, Rosengren made it clear that the falling rate is “a threshold – i.e., a point at which discussion about policy options should begin – versus a trigger – a point at which a specific policy action would automatically begin.”