Fed's Evans says he's nervous about inflation weakness


UPDATE 1-Fed's Evans says he's nervous about inflation weakness

(Adds quotes, background)
    WASHINGTON, June 20 (Reuters) - Chicago Federal Reserve Bank
President Charles Evans said on Tuesday he is increasingly
concerned that a recent softness in inflation is a sign the U.S.
central bank will struggle to get price pressures back to its 2
percent objective.
    "I will say that the most recent inflation data made me a
little nervous about that. I think it's much more challenging
from here on out," Evans said in an interview with broadcaster
    Evans, who is a voter this year on the central bank's
rate-setting committee, said that global forces, not just
specific one-off reasons, could be behind a retreat in inflation
over the past three months.
    In a news conference following the Fed's decision to raise
interest rates last week for the second time in three months,
Fed Chair Janet Yellen largely blamed temporary factors for the
inflation shortfall.
    "In a world of global competition and new technology, I
think competition is coming from new places. New partners are
choosing to merge and sort of changing the marketplace, and
(there's) more competitive pressure potentially on price
margins," Evans said.
    If inflation remains in a slump, the Fed may require a
shallower path of rate rises, he added.
    The Chicago Fed chief also reiterated his belief that given
the lack of clarity on inflation, the central bank could wait
until December before deciding whether to raise rates
    Asked about the timing of the Fed's plans to begin reducing
its balance sheet, Evans said it was "pretty close."

 (Reporting by Lindsay Dunsmuir; Editing by Chizu Nomiyama and
Dan Grebler)
 ((Lindsay.Dunsmuir@thomsonreuters.com; +1 202 898 8411;))


This article appears in: Politics , Fundamental Analysis , Stocks , World Markets , Economy

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