Fed official: Data calls for action

A senior Federal Reserve official said recent employment data has buttressed his opinion that the Fed must act to accelerate U.S. economic growth. Eric S. Rosengren, president of the Federal Reserve Bank of Boston, said Monday the Fed should expand its holdings of mortgage bonds and Treasury securities and that purchases should continue until the Fed is assured that the economy is healthy, The New York Times reported. "You continue to do it until it's clear that you're no longer treading water," Rosengren told the Times. "You continue to do it until you have documented evidence that you're getting growth in income and the unemployment rate consistent with your economic goals." The government last week reported payrolls rose by 163,000 in July, more than analysts had predicted. Rosengren noted several indicators, including the unemployment rate and the percentage of the population in the work force, returned to levels seen at the beginning of the year. "For the last seven months we've been treading water. That's different from what we expected at the beginning of the year," he said. "I think it's time to swim to shore." Rosengren said he's frustrated by colleagues who oppose new action. He said even officials who are skeptical about the Fed's ability to promote job growth should support new action to push the current pace of inflation rate of about 1.8 percent to the 2 percent level, the level the Fed considers most healthy. "The one thing I think all economists agree on is that the Fed should be able to have an impact on inflation," he told the Times. "We're missing on the inflation target. I think all economists would agree that we should take action to get back to the inflation target."