In fits and starts, the unemployment rate has steadily declined to its current 8.5 per cent mark since peaking at 10 per cent in October 2009.Philadelphia Fed president Charles Plosser believes the figure will only improve, and could hit 8% by the end of the year.
In remarks to a local chamber of commerce today, Plosser observed that the unemployment rate fell nearly a full percentage point between Fall 2010 and Winter 2011. The last time unemployment fell at such a rate, he said, was in 1995.
“As growth continues and strengthens, I expect further gradual declines in the unemployment rate,” he said.
He also projected inflation to remain under control, pointing to tempered growth in commodity prices compared to a year ago.
Finally, he said he disagreed with the Fed’s decision to formally announce zero per cent interest rates through 2014, given what he sees as improving conditions and the diminishing risk of a double-dip recession. Such a move, he said, undermines confidence in monetary policy.