Fed's Rosengren: Overshoot of full employment may shorten the recovery

Discussion in 'Fundamental Analysis' started by ForexLive, Sep 23, 2016.

  1. ForexLive

    ForexLive Forum Member

    Sep 2, 2015
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    On Bloomberg explaining his decision to dissent on Wednesday. This is from a statement on the Boston Fed's website "Unemployment this low may well have the desirable effect of bringing more workers into the labor force - but, unfortunately, only temporarily. Historical experience suggests it also risks overheating the economy, the effects of which include heightened pressure on inflation and potentially increasing financial-market imbalances. Gently backing the economy away from such imbalances has proven to be very difficult in the past. In fact, such overshoots have in the past always resulted in a recession, rather than a return to the full employment level. Accomplishing a soft landing is difficult, and very rarely achieved. This is true whether reducing the unemployment rate, such as from its recent high of 10 percent, or raising it back to its full employment value from below.

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