18 May 2015
Inflation too low, doesn’t see it reaching 2% until 2018 – Fed’s Evans
FXStreet (Mumbai) - Federal Reserve Bank of Chicago President Charles Evans once again came out calling for the central bank to refrain from raising the interest rates this year as he does not the inflation rising to the fed’s target of 2% until 2018.
Evans said the fed has fallen short of hitting its price target for a number of years, “it makes sense to favor some overshooting” of the 2% price target in a bid to achieve the central bank’s growth and price pressure mandates more quickly, he said. “There aren’t any serious costs of modestly overshooting our inflation target–particularly considering how long inflation has been below our target,” Mr. Evans said.
“Economic activity appears to be on a solid, sustainable growth path,” Mr. Evans said. “However, the weak first-quarter data do give me pause, and I would like to see confirmation that they are indeed a transitory aberration,” he said, explaining “it likely will not be appropriate to begin raising the fed funds rate until sometime in early 2016.”
Evans said the fed has fallen short of hitting its price target for a number of years, “it makes sense to favor some overshooting” of the 2% price target in a bid to achieve the central bank’s growth and price pressure mandates more quickly, he said. “There aren’t any serious costs of modestly overshooting our inflation target–particularly considering how long inflation has been below our target,” Mr. Evans said.
“Economic activity appears to be on a solid, sustainable growth path,” Mr. Evans said. “However, the weak first-quarter data do give me pause, and I would like to see confirmation that they are indeed a transitory aberration,” he said, explaining “it likely will not be appropriate to begin raising the fed funds rate until sometime in early 2016.”