A Federal Reserve official painted a negative picture of the U.S. economy Monday, arguing that recent disappointing readings of economic output cannot be excused because of the unusually harsh winter weather in parts of the country.
The economic statistics were “also weak before the storms and have been weaker than expected ever since,” said Federal Reserve Bank of Boston president Eric Rosengren in text for a speech in Hartford.
Rosengren made the case that the forecasts offered by the Federal Reserve have been overly optimistic, and that the central bank should continue to keep interest rates low until the data, not just official forecasts, improve.
Over the past two years, Rosengren noted, U.S. gross domestic product has grown at 2.3 percent, adjusted for inflation, below the 3 percent rate that is normal for when the Fed begins raising rates.
First-quarter gross domestic product growth came in at a negative 0.7 percent annual rate, the Commerce Department reported Friday.
If that weak growth were attributable to winter storms slowing production and discouraging consumers from spending money, Rosengren said, faster growth would be expected in future months as the missed business took place. But there “has not been much evidence of such a snapback,” Rosengren said.
He concluded that “the conditions for beginning the tightening of monetary policy have not yet been met.”
Federal Reserve chairwoman Janet Yellen has reiterated that the Fed is likely to move forward with raising its target rate for the first time since 2008 this year, but that view is not shared by all Fed members.
Rosengren, one of 12 regional bank presidents, is generally viewed as one of the more “dovish” members of the central bank. That is, he is more willing to pursue loose monetary policy rather than express concern about inflation rising above the Fed’s 2 percent long-term target.
He is not a voting member of the Fed’s monetary policy committee in 2015, but will rotate into such a position next year.
