Boston Fed President Affirms Inflation, Unemployment Notes Struck Earlier

At least two district Federal Reserve Bank presidents agree that the Fed is not yet out of bullets in the battle to recover US economic growth. NY Fed President William Dudley spoke earlier today about the need for more mortgage refinancing to get things going again.

Now Boston Fed President Eric Rosengren has told a business group in Hartford, Connecticut that government also needs to help small businesses get the money they need to expand:

I believe that policymakers can and should continue to look at ways to better target fiscal and monetary policy to address the housing and small business financing problems we are seeing in this recovery.

Rosengren expects US inflation to remain below 2% in 2012 and “also over the next several years.” But that low inflation rate also weighs down wages and employment, and suggests that “at least one reason for slow job creation in this tepid recovery may be that obtaining financing for new firms has become more difficult.”

None of this is particularly new, but two Fed presidents giving complementary speeches that hint at letting inflation rise more quickly in an effort to promote employment is not something you hear every day.