Rosengren: Economy will grow at a solid pace
The US economy will grow at a solid pace this year, but unemployment will remain relatively high -- as the sluggish housing market continues to weigh on the recovery, the president of the Federal Reserve Bank of Boston said today.
Eric S. Rosengren, president of the Boston Fed, said that unlike many other economic recoveries in recent history, housing and residential investment will not serve as an economic engine, helping to keep unemployment high for years.
"To put it plainly, these housing-related headwinds are part of why I do not expect growth greater than 4 percent this year,'' Rosengren said at the New England Mortgage Expo held at the MGM Grand at Foxwoods in Connecticut. "And while 4 percent is not terrible, at that rate, it will still take a very long time to get back to full employment."
Rosengren spoke at a conference hosted by the Connecticut Mortgage Bankers Association and the Warren Group, a Boston firm that tracks local real estate. He added that monetary policy makers should continue to intervene until the economy becomes more self sustaining.
"Going forward, it is my view that monetary policy must continue to focus on addressing both elements of the Fed's mandate -- price stability, and growth supporting a return to full employment in the medium term,'' he said.