(Reuters) - Meager job gains last month show “the uneven pattern” of activity in a economy that, overall, is showing some forward momentum, a top Federal Reserve official said on Monday.
Cleveland Fed President Sandra Pianalto said the economy needs to grow at a faster rate in order to speed up the pace of employment growth and repair damage from the 2007-2009 recession, though she did not comment specifically on policy.
“If our economy were a Kentucky thoroughbred, I’d say we have moved from a walk to a trot, but we’re far from a gallop,” Pianalto, a voting member this year on the central bank’s policy-setting committee, said at a bankers’ event in Lexington, Kentucky.
The Fed next meets on April 24-25, when it is not expected to adopt any fresh policy measures beyond its ultra-easy monetary stance, but rather use the meeting to discuss the latest economic developments and further refinements to its communications strategy.
Central bank officials have suggested the economy would need to deteriorate, and inflation would need to remain below a 2-percent target, for them to consider more stimulus in the form of bond purchases - a controversial move that would increase the Fed’s balance sheet from almost $3 trillion currently.
Still, a Reuters poll conducted after the release of disappointing March employment figures found most Wall Street primary dealers think a third round of Fed bond-buying will eventually take place.
Although the unemployment rate slipped to a still-high 8.2 percent in March, jobs growth slowed sharply, raising fears the labor market could start to sputter as it did a year ago. Nonfarm payroll employment rose by only 120,000 last month.
“Recent labor market data provide an example of the uneven pattern of economic activity,” Pianalto said, citing the surprisingly good jobs reports in January and February. “Monthly ups and downs like these make it hard to confirm the underlying pace of job creation.
“So it seems as though the labor market is still improving, albeit at a modest pace,” she added.
Pianalto is a moderate dove in line with Fed Chairman Ben Bernanke’s core of policymakers who have kept interest rates near zero since late 2008 and bought some $2.3 trillion in longer-term securities to help along the recovery and lower unemployment.
The head of the Cleveland Fed repeated her expectation that the economy will grow at a 2.5 percent rate this year and 3 percent next year and that it could take up to four or five years for the unemployment rate to fall to 6 percent.
At its last two meetings, the central bank said it expected to keep rates “exceptionally low” at least through late 2014.
Reporting by Jonathan Spicer in New York; Editing by Padraic Cassidy and James Dalgleish