Fed's Rosengren: Does not expect US to breach 2% sustained inflation over next two years
|In remarks prepared for a virtual event organized by the Greater Boston Chamber of Commerce, Boston Federal Reserve Bank President Eric Rosengren that the US economy could see a strong rebound in the second half of this year.
Rosengren expects vaccinations will become widely available but noted that the virus is still driving the economy and how monetary policy will remain accommodative.
“The pandemic is likely to continue to be a problem for public health and the economy until widespread vaccinations take hold.''
“Nonetheless, with substantial fiscal and monetary support, I expect a robust recovery starting in the second half of this year.”
Rosengren also said tat he expects consumption to rise, and for the unemployment rate to drop, in the second half of the year as vaccinations are distributed.
Low interest rates should continue to support the housing market and the labor market could see strong gains over the next two years, Rosengren said.
But he does not expect inflation to reach the Fed’s 2% inflation target in that same time frame, suggesting that short-term interest rates are likely to stay “very accommodative,” he said.
Market implications
The greenback is correcting within monthly demand territory but is weighed by ongoing speculation of lower rates for longer and on going stimulus measures.
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