Kontan Online

THE FED

Fed's Evans says wanted to wait until midyear for rate hike

Wednesday, 10 January 2018 | Rizki Caturini

KONTAN.CO.ID - NEW YORK. Chicago Federal Reserve Bank President Charles Evans on Wednesday said that in late 2017 when the rest of his Fed colleagues decided to raise interest rates for a third time, he wanted to wait until mid-2018.

While most of his colleagues believe that a strengthening labor market will boost inflation this year, justifying higher interest rates, Evans said he has seen that forecast for several years running and it has not panned out.

“I’d feel a lot more confident if I saw those transitory reductions in the inflation rate go away,” he said in his first public remarks of 2018.

He added that he expects the U.S. economy to grow a touch faster than 2.5 percent this year, helped by recent tax cuts, and a touch slower than 2.5 percent next year, which is faster than trend growth and should allow the labor market to continue to strengthen.

Still, he said, “I do not yet think that we have gotten to a point where we have overshot” on full employment, he added, saying that wage growth would be faster if it had.

And, he said, he does not see much risk that the economy will accelerate faster than he is forecasting. If it does, he said, and inflation picks up, the Fed is able to deal with that problem by raising rates. But if inflation worsens with rates as low as they are, he said, the Fed has fewer tools to deliver stimulus.

Evans does not have a vote on the Fed’s monetary policy-setting committee this year but takes part in its meetings, the next of which is to take place in late January.

Source : Reuters

Reporter: Rizki Caturini
Editor: Rizki Caturini
loading...