Ongoing economic recovery will require a ‘much more gradual’ normalization than past recoveries: Fed’s Rosengren

On Tuesday, Eric Rosengren, president of Boston Federal Reserve, said that the ongoing economic recovery from the 2008 financial crisis is not like other earlier recoveries. Rosengren said that it will need a ‘much more gradual’ normalization.

His comments showed that at least one member of the Federal Reserve System thinks that it is not going to be right for the central bank to raise its interest rate target from zero at the approaching September meeting.

Rosengren added, “The incoming data have not cooperated with the forecasts. But I think the US economy is strong enough, that the risk of foreign weakness tipping the US into a recession is a ‘relatively low-probability’ event”.

Rosengren didn’t vote on the Fed’s policy making committee this year. He echoed other bank officials by saying that he did not foresee a great effect from the first rate hike, but placed more weight on the later trajectory. Over the medium term, the Fed has a target of 2% inflation, which according to it is healthy for the economy.

Drivers challenged the position of company, saying that they are contractors and not employees. Rosengren added that the latest reports on wages and salaries still showed some signs that the tightening labor markets have been translated into increases in wages and salaries consistent with reaching 2% inflation.

In fact, the recent readings on the US economy have suggested that 10 years of economic stimulus has begun to pay off. Previous week, the Department of Commerce reported that the gross domestic product, which is the total of all goods and services produced in the United States, has seen a revised 3.7% rise in the second quarter of 2015.