Three US Fed Officials see slower growth and higher unemployment

Speaking in Bangkok Monday, 2 of the Fed's most Dovish policymakers were adamant.

Additional monetary accommodation is needed to more quickly boost output to its full potential level, Chicago Federal Reserve Bank President Charles Evans told the Sasin Bangkok Forum. The economic circumstances warrant extremely strong accommodation.

Addressing the same forum, the President of the Boston Federal Reserve, Eric Rosengren, backed that POV, saying he saw slower growth and higher unemployment than most of his colleagues.

So far data has been coming in weak and I gave a weak forecast myself, he told reporters after his speech. I think it's appropriate to have more quantitative easing.

Neither is a voting member of the Fed's policy-setting panel this year, but both will be in Y 2013.

At the forum, Rosengren said he thought inflation would only be around 1.2% in Y 2012.

Mr. Evans sad wage pressures were virtually non-existent and that inflation was likely to stay at or below the Fed's 2% target

He acknowledged that advocating a policy that risks pushing up inflation, even temporarily, opened him up to charges of central bank blasphemy.

I cannot tell you how often people look at me in abject horror when I say that we should adopt a conditional policy that tolerates the risk of inflation exceeding our target by as much as 1 percentage point, he said.

But with US unemployment already several percentage points above the level most see as sustainable, the Fed should be willing to tolerate a modest, transitory rise in inflation to bring it down, Mr. Evans said.

We are right at that edge, that if economic data keep coming in below our expectations, and our view is we are not making progress on our mandates, or we do not expect to make progress on our mandates, then I think we would need more accommodation, San Francisco Fed President John Williams told reporters after a speech in the resort area of Coeur D'Alene, Idaho.

Mr. Williams said he also believed that a temporary rise in inflation would not be worrisome, but added that inflation is likely to stay low because growth is slow.

Mr. Williams is a voter on the Fed's policy-setting panel this year, he has cut his growth forecasts for the next 1.5 yrs and now expects the jobless rate, currently at 8.2%, to stay above 8% until 2-H of next year

The Fed next meets to discuss policy on 31 July to 1 August, and then on 12-13 September .

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.