Chicago Federal Reserve Bank President Charles Evans told a conference on the sidelines of the IMF and World Bank meetings in Washington. D.C. that a stronger US dollar and weak global inflation are putting downward pressure on the pace of price increases in the U.S. economy.
- The Fed targets a 2 percent inflation rate, but Evans said the trend appears to be around 1.5 percent at present.
- The dollar’s strength, therefore, presents another “headwind” because it reduces net exports and also imports the low inflation rates of America’s trading partners, he said.
Repeated his view that the Fed should keep its benchmark interest rate near zero until the first quarter of 2016.
Added: There is a video of Evans discussing his outlook for the U.S. economy, inflation and Fed policy with Jan Hatzius, Goldman Sachs’ chief economist, available at Bloomberg, here.