FOMC Voter Hoenig Says Downbeat U.S. Employment Report Doesn’t Affect His Outlook for the Economy

A little update my fellow Americans....

Despite last Friday’s benchmark U.S. employment report revealing the world’s largest economy lost 85,000 jobs in December, Kansas City Fed President Thomas Hoenig said on Monday that he hasn’t altered his projection for a “modest” yet “persistent” recovery. Speaking in an interview with Bloomberg Radio, the central banker added that he forecasts that the American economy will expand by between 3% and 3.5% in 2010. Asked by the broadcaster if the central bank could begin tightening monetary policy even with the unemployment rate at 10%, Hoenig, who votes on the FOMC this year, responded, “The answer is yes, you can, given you are at zero [in terms of interest rates].” He also said that the Fed should cease its purchases of mortgage-backed securities at the end of March, as planned, due to the fact that the private mortgage market is “healing”. During Hoenig’s interview, EUR/USD weakened by as much as 26 pips, reaching $1.4508USD, before beginning to make gains again.