Having dissented, Fed's Rosengren gets comfortable with QE cuts

Tue Jan 7, 2014 12:00pm EST
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By Jonathan Spicer

HARTFORD, Connecticut (Reuters) - The lone Federal Reserve official to dissent against the U.S. central bank's decision to cut stimulus said on Tuesday he is nonetheless comfortable with the current approach of reducing bond-buying by $10-billion increments at each policy meeting.

In an interview, Boston Fed President Eric Rosengren warned against any "dramatic steps" to wind down the asset purchases and gave what might be the most detailed outline to date of what economic conditions might cause the U.S. central bank to veer from a uniform withdrawal of accommodation.

The comments from the dovish central banker may reinforce public expectations that the so-called quantitative easing program, or QE, is on track to be wound down and shelved by year end with few surprises along the way.

"I'm comfortable with the current approach that it looks like we're going to be following through on," Rosengren told Reuters after giving a speech to an economic forum here.

Last month, the Fed reduced to $75 billion from $85 billion the amount of assets it buys each month in an aggressive effort to spur investment and hiring in the protracted wake of the Great Recession.

Fed Chairman Ben Bernanke has said QE would likely be wound down throughout this year as the U.S. economy improves.

Rosengren, who repeated on Tuesday he would have preferred to delay the policy change, appeared to be getting in line with what Bernanke called a "measured" removal of what amounts to the biggest monetary policy experiment ever.

"Roughly a $10 billion at each FOMC, if we were to gradually reduce purchases, I think that would be appropriate," Rosengren said of the policy-setting Federal Open Market Committee meetings. "I wouldn't want to take any dramatic steps at this stage because I don't think the economy warrants it."   Continued...

Boston Fed President Eric Rosengren speaks during the Sasin Bangkok Forum July 9, 2012. REUTERS/Sukree Sukplang