Purchases of existing houses increased 7.8 percent to a 4.82 million annual rate in August, the most since May 2010, figures from the National Association of Realtors showed yesterday in Washington. Commerce Department data showed builders began work on the most one-family homes since April 2010.
Confidence among homebuilders climbed to the highest level in more than six years, according to a Sept. 18 report of the National Association of Home Builders/Wells Fargo builder sentiment index.
Rosengren joined Chicago Fed President Charles Evans and the New York Fed’s William C. Dudley in defending the third round of quantitative easing.
Evans said in a speech in Ann Arbor, Michigan on Sept. 18 that the Fed’s actions will help strengthen a pace of growth that has been “disappointing” and help counteract “greater downside risks posed by the slowdown in global economic growth, the economic turmoil in Europe and the fast-approaching U.S. fiscal cliff.” If Congress doesn’t act, more than $600 billion in automatic tax increases and spending cuts will take effect starting in January.
Dudley said Sept. 18 that without further action from the Fed, growth would remain “unacceptably slow.” Dudley also said monetary policy isn’t a “panacea” although a “nudge in the right direction will move us closer to a self-reinforcing cycle of more hiring, more spending, more growth, and more investment.”
Jeffrey Lacker of the Richmond Fed voted against the decision to purchase more bonds, extending his string of dissents from every FOMC decision this year. He said more stimulus “runs the risk of raising inflation.”
Rosengren said his own economic forecasts assume that Congress will come to “some sort of agreement” to prevent the full range of tax increases and spending cuts scheduled to take effect at the end of the year.
‘Swamped by Events’
He said he doesn’t worry that QE3 will be ineffective and is more concerned that “we would be swamped by events out of our control -- the fiscal cliff, Europe, China other things going on in the world.” He added he does not forecast a “severe problem” coming from Europe or China.
Fed Presidents rotate voting on monetary policy, with Rosengren, 55, voting next year. He has led the Boston Fed since 2007. Rosengren’s remarks were titled “Acting to Avoid a ‘Great Stagnation.’”
“I am very pleased that monetary-policy makers in the U.S. are proving willing to take difficult actions like these rather than accept the possibility of a long, slow recovery turning into a stagnation that someday earns the dubious title of ‘Great,’” he said.