Fed's Evans: Expects fed funds rate to eventually rise to 3%-3.25%

Author: Greg Michalowski | Category: Central Banks

Fed's Evans speaks in Illinois

Feds Evans speaks in Illinois. He says:
  • expects the Fed funds to eventually rise to 3% – 3.25% range
  • stocks decline puts valuation around long-run average
  • downside risk increased by market turmoil, trade war
  • sees inflation averaging just above 2% over the next 3 years
  • inflation expectations of not risen as much is expected
  • 1st half of 2019 is important for assessing Fed policy
  • sees US growth bit more than 2% in 2019
  • Fed has  capacity to wait and take stock of incoming data
  • sees unemployment falling toward 3.5%, a bit higher by end of 2021
  • downside risks include growth abroad, US trade policy, fiscal headwinds
  • there upside risks too. Case can be made for reasonably good 2019 the economic outcome
  • crosscurrents are tough to read in fluid environment
  • Hopefully, the economic data will be more like the strong December employment report and financial market volatility will settle down
The current fed funds rate is 2.00%-2.25%. The Fed projected two rate hikes in 2019 at the December meeting.  That was down from three.   The FOMC meeting minutes will be released a at 2 PM ET today. 
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