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Rosengren flags jobs report, yet says Federal Reserve rate hikes coming
[HELSINKI] The US economy's rebound from a weak winter has moved the Federal Reserve closer to raising rates, though last month's poor employment report might give it pause, a top Fed official said on Monday.
Boston Fed President Eric Rosengren, speaking in Finland, gave the latest hint that while the US central bank remains on track to continue tightening policy it likely will not do so at a June 14-15 meeting.
"Lately the economic data have been choppy" with the May employment report "disappointing," Mr Rosengren, a dovish voter on Fed policy this year, said at the Global Interdependence Centre conference in Helsinki.
The report showing the US economy added just 38,000 jobs in May, along with a sensitive vote later this month on Britain's membership in the European Union, have convinced most economists that the Fed will wait until July or September to raise rates again after lifting them from near zero in December.
Mr Rosengren said the jobs data contrasted with a strong pick-up in US spending and growth in the second quarter, so "it will be important to see whether the weakness in this report is an anomaly or reflects a broader slowing in labor markets."
But he still expects "sufficient economic growth to justify a gradual removal of accommodation" and he noted that, at 4.7 per cent, unemployment has dropped to his estimate of "full employment," a key goal since the financial crisis.
While Mr Rosengren has long favored more accommodation than most colleagues at the Fed, he has sounded more confident in recent months. In his last public comments on policy, in late May, he said conditions for a rate increase were "on the verge of broadly being met."
On Monday he said a "snap back" from weak first-quarter economic growth was due to "strong" retail sales, which he said was a good omen for broader US consumer spending.