FILE PHOTO: Chicago Federal Reserve Bank President Charles Evans watched on February 27, 2020, during the Global Interdependence Center Members Delegation Event in Mexico City, Mexico. REUTERS / Edgard Garrido
Remarks from several Fed policymakers in recent times suggest that a shift to a more aggressive stance in the pursuit of high inflation is not imminent and most think the next step needs to come from Congress to support the economy .
The president of the Chicago Fed, Charles Evans, said “the risk of additional fiscal relief from partisan politics is in jeopardy” for months on the size of a new relief package. “A lack of action or insufficient presents a very significant downside risk for today’s economy,” Evans said.
But once Coronavirus is under better control and unemployment has declined somewhat, he said, the Fed may need to shift its adjustment policies to higher gear.
He said that on Thursday he said that a method of promising to keep interest rates close to zero could be adopted to push inflation down to 2.5%, while inflation above the current low level and marginally above the US central bank’s inflation target Is above 2%.
“As long as we were trying to reduce inflation a lot, inflation was below 2.5%,” Evans told reporters over the phone.
The US central bank announced last week that it was revising its approach to establishing monetary policy to focus on employment reduction and less than inflation.
Evans was the architect of an approach adopted by the Fed in 2012 in which it vowed not to raise rates until unemployment fell below 6.5% until inflation was projected to exceed 2.5%.
“I think the way we did it in 2012 is not ugly, (but) our environment is somewhat different now because we’re saying we want an average of 2%,” Evans said.
In a similar vein, Atlanta Fed President Rafael Botik said he would not be concerned about inflation at 2.4%.
In an interview with Walt Street, Ballistic said, “As long as we see the trajectory moving in ways that suggest we’re not going too far from our goal, I’m just comfortable driving the economy and taking it Letting play. ” Journal on Thursday.
While the Fed’s preferred gauge of inflation, the core PCE index, measured above 2.4% sometime in 2006 and 2007, the last time it did so for a sustained period was in the early 1990s.
There is complete agreement by Fed policymakers that the Fed should not raise rates due to unemployment because “until you see inflation,” the biologist said.
Reporting by Ann Saffir; Editing by Leslie Adler