FEDERAL RESERVE/LABOR: “Eric Rosengren, president of the Federal Reserve Bank of Boston, said increasingly tight labor markets should keep the U.S. central bank on its path to gradually raise rates and start slowly shrinking its portfolio of bonds and other assets, despite a surprising pause in inflation pressures this spring.
In an interview, Mr. Rosengren said he sees ‘some reasonable risk’ that the unemployment rate drops below 4% in the next two years. ‘In my own view, that would not be sustainable,’ he said.
While the Federal Reserve’s preferred inflation gauge has shown price pressures have eased in recent months, Mr. Rosengren said he was more focused on longer-run trends in labor markets, which argue for continued rate increases, than on month-to-month inflation figures.
Fed officials have strongly suggested their next step—before another rate increase—will be to announce in September they will begin winding down their holdings of Treasury and mortgage securities. Mr. Rosengren appeared to support that view.”
-Nick Timiraos, “Rosengren: Tight Labor Markets Justify Fed Plans to Keep Raising Rates,” The Wall Street Journal online, Aug. 2, 2017 03:53pm