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Fed Evans: Worthwhile to wait for 2% inflation

Sees natural rate of employment at 4.75%

Fed's Evan's is on the newswires saying it would be worthwhile for the Fed to wait for 2% inflation.

The Chicago Fed President also says:

  • One US interest rate increase this year could be appropriate
  • Sees natural rate of US employment at 4.75%
  • does not see see inflation reaching 2% before end 2018
  • economy doing quite well despite uncertainty, headwinds
  • we should aim to get inflation a bit above feds 2% goal
  • pushing inflation to 2.5% should be manageable
  • says he expects 1.5 to 1.75% GDP growth in 2016
  • long-lasting risks if inflation doesn't reach 2%
  • not clear if policy works with long, variable lags
  • doesn't seem much inflation being generated by labor market

The comments are largely more dovish. If he does not see inflation reaching 2% until 2018 and he thinks it is worthwhile to wait for 2% inflation, it suggests if the Fed does move in 2016, it would be a stretch - at least for him.

Evan's is speaking to reporters at a briefing in Chicago. There is little market reaction so far. The S&P is trading at up 3.82 points while the Nasdaq is up about 9.5 points.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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