US economy to continue growing, justifying further tightening, Fed´s Rosengren says

The sharp slowdown in hiring Stateside in May did not fit in well with recent retail sales data showing a "snap back" in consumption, a top US central bank official said, adding that he expected to see a continued gradual improvement in the economy.

Eric Rosengren, the president of the Federal Reserve bank of Boston, said it would be important to determine whether May´s weak jobs report was an "anomaly" or instead reflected a broader slowing in labor markets".

"Lately the economic data have been choppy ... it is my expectation that economic conditions will continue to gradually improve, which in turn would justify further actions to normalize policy, continuing a gradual return to a more normal interest rate environment," he said in remarks prepared for a speech to be delivered in Helsinki on Monday.

Rosengren also pointed out how the pattern observed during the first quarter, with strong hiring but weak consumption, appeared to have reverted to the opposite thus far in the second quarter.

In his speech, the policy-maker did not share his thoughts on what course of action the Federal Open Market Committee should pursue when it next met to decide on policy on 15 June.

Instead, he reiterated the three conditions which rate-setters had laid out at the last FOMC to continue tightening policy.

Those were a rebound in spending, continued strength in the labour market and further progress on reaching the 2% inflation target.

With those conditions in mind, the central banker pointed to tracking estimates of GDP growth which were pointing to a reacceleration in the economy and flatly stated that at 4.7% the rate of unemployment had reached his definition of full employment.

Likewise, he added that "we are seeing some evidence of inflation moving toward the 2% inflation target [...] I still expect sufficient economic growth to justify a gradual removal of accommodation."

Lastly, the regional Fed chief reiterated his view that the "normalization process will continue to be gradual, compared with previous episodes of US interest rate tightening."