* Rosengren: More Fed easing 'appropriate, necessary'
* Dudley, Fisher see no need for Fed easing now
By Corrie MacLaggan and Ros Krasny
SAN ANTONIO/WORCESTER, Mass., May 30 (Reuters) -
U nderscoring the divide at the U.S. Federal Reserve over its
next move, Boston Fed President Eric Rosengren on Wednesday
called further policy easing to bring down high unemployment
even as two other top Fed officials said no further action was
"I believe further monetary policy accommodation is both
appropriate and necessary," Rosengren told the Worcester
Regional Research Bureau's annual meeting.
And if Europe's debt crisis worsens or U.S. lawmakers allow
scheduled tax hikes and spending cuts to sending the domestic
economy over a "fiscal cliff" at year's end, "more aggressive
actions would certainly be warranted," Rosengren warned.
His full-throated call for more monetary easing came on the
heels of more sanguine remarks from New York Fed chief William
Dudley and Dallas Fed President Richard Fisher earlier in the
day, both of whom were cool to further Fed easing.
Although Dudley and Fisher stand on opposite ends of the
policy spectrum at the Fed, they agreed on Wednesday that the
current lofty unemployment rate should not force the U.S.
central bank's hand.
"As long as the U.S. economy continues to grow sufficiently
fast to cut into the nation's unused economic resources at a
meaningful pace, I think benefits of further action are unlikely
to exceed the costs," said Dudley, usually seen as a job-focused
Fisher - a self-described inflation hawk - reiterated his
longstanding view that the best way to boost jobs is for
Congress to provide more clarity on tax policy and government
"I don't hear any business people and job creators saying,
'I need more liquidity, I need more money,'" Fisher told
reporters after a speech. Even though inflation is not currently
a threat, he said: "I don't see what we would accomplish with
Dudley has a permanent vote on the Fed's policy-setting
panel while neither Fisher nor Rosengren is a voter this year.
The panel next meets June 19-20.
The Fed has kept U.S. short-term interest rates near zero
since December 2008, and has said it plans to keep them there
until late 2014. It has also bought $2.3 trillion in bonds over
the past several years to further bring down borrowing costs and
boost the economy.
After a pickup in economic growth and a sharp decline in the
unemployment rate late last year, recent weakness in U.S.
employment data and a simmering debt crisis in Europe have
rekindled speculation that the Fed may step in to do still more.
At the same time, some Fed policymakers, including
Minneapolis Fed President Narayana Kocherlakota, want the Fed to
begin raising rates again as early as this year.
Fed Chairman Ben Bernanke has kept the door open to further
easing should the economic outlook worsen, a view echoed on
Wednesday by Dudley.
"If the economy were to slow so that we were no longer
making material progress toward full employment, the downside
risks to growth were to increase sharply, or if deflation risks
were to climb materially, then the benefits of further
accommodation would increase in my estimation and this could
tilt the balance toward additional easing," Dudley told
Still, Dudley said expects a "gradual decline" in the
unemployment rate "stretching out over next few years."
The U.S. jobless rate stood at 8.1 percent in April, a month
in which job growth slowed sharply, as it did in March. The May
jobs report is due to be released on Friday.
For Rosengren, the too-high jobless rate and the possibility
that failing to bring it down quickly could allow it to become
engrained in the economy are enough to warrant further Fed
The Fed could use communications to signal more
accommodation, he said.
Just one other top Fed official, Chicago Fed President
Charles Evans, had called publicly for more policy easing in
The Boston Fed president's aggressively dovish stance
emerges from an economic outlook that is markedly more gloomy
than many of his colleagues.
On Wednesday he forecast U.S. economic growth of 2.3 percent
this year, slower than the majority of his fellow policymakers,
who in April saw growth of 2.4 percent to 2.9 percent.
Rosengren also expects 1.7 percent inflation, lower than any
of his colleagues' forecasts in April.
And his view that unemployment will still be at 8.1 percent
in the fourth quarter likewise puts him at the pessimistic end
of the scale.
"My desire to stimulate more growth now is partly to prevent
the structural problem from becoming more severe because the
economy did not re-employ workers more quickly," Rosengren said.
He also said his forecasts were contingent upon Europe
muddling through its debt crisis and U.S. lawmakers avoiding the
so-called fiscal cliff - a raft of tax hikes and spending cuts
set to kick in at the start of 2013 - that could otherwise send
the United States back into recession.
On Wednesday, Dudley also warned about risks from Europe and
a potential fiscal cliff, which would be a "huge shock" to the
economy and lead to a tightening of gross domestic product
growth of some 3 percent.