Oct 5 Chicago Federal Reserve Bank President
Charles Evans said on Wednesday that he is "less concerned" with
when another rate hike occurs than he is on formulating
inflation criteria for the pace of subsequent increases.
"I am less concerned about the timing of the next increase
than I am about the path over the next three years," Evans said
in prepared remarks on the U.S. economy at an event in Auckland,
Given his worries about persistently low inflation that
remains below the Fed's 2 percent target, Evans also said he
would like to see a change to the Fed's communications when they
next raise rates to "indicate that subsequent increases will
depend on seeing...changes in inflation indicators."
The Fed's preferred inflation measure stands at 1.7 percent
and has been below the central bank's goal for more than four
Evans noted he wants to see solid evidence inflation is
moving upwards on a sustained basis and have more confidence
that inflation expectations are symmetrically aligned with the
Fed's inflation target. A "very shallow" rate path is necessary
to help spur that, he said.
The Fed is divided on the timing of another rate increase
following an initial liftoff from near zero last December.
Evans, who gains a vote on the rate-setting committee in
2017, is among those policymakers repeatedly warning that rates
should not rise fast or far in a low-rate, low-growth global
environment that lacks inflationary pressures.
Other policymakers, including three who dissented on the
Fed's decision to stand pat at its September meeting in favor of
an immediate increase, fear the central bank getting behind the
curve on inflation and that low rates could increase financial
In his prepared remarks, Evans said his estimate of the
so-called natural rate of unemployment is 4.7 percent and he
expects the rate to drop to 4.25 percent by the end of 2019.
The current unemployment rate is 4.9 percent.
Underscoring his view that the Fed should run the labor
market hot in order to spark higher inflation, Evans added that
"undershooting the unemployment goal is a necessary feature of
appropriate monetary policy" to raise inflation back to 2
percent "in a reasonably timely and sustainable fashion."
There are two more meetings this year on Nov. 1-2 and Dec.
13-14. Traders have all but ruled out a move at the November
meeting given its proximity to the U.S. election. They are
currently pricing in a 63 percent probability of a rate hike in
December, according to data from CME Group.
(Reporting by Lindsay Dunsmuir; Editing by Diane Craft)