Eric Rosengren, president of the Federal Reserve Bank of Boston and a Fed pessimist, is having a change of heart after seeing an increase of jobs around his neighborhood. After the weak job report in March, speculation concerning the slow-down of the economy increased but Mr. Rosengren believes the economy is only beginning to gain traction. He views the growth in interest-rate-sensitive sectors like housing and auto as a positive but has not disregarded last month’s job report and the potential instability in Europe. Mr. Rosengren is expecting the U.S. economy to lose some steam this quarter but projects a 3% growth for the second half of the year; his projection of a 3% growth will come along with a decrease in unemployment to around 7.2% by the year’s end.
Everything I had read regarding the Fed’s stimulus package always insisted its modification would not occur until unemployment hit 6.5% or inflation 2%. Word on the street however rebukes this; Mr. Rosengren himself said he would be prepared to begin tapering the package if the economy meets his expectations towards the end of this year.
The Wall Street Journal