Fed's Evans: Labor market seems quite vibrant, but.....

Author: Greg Michalowski | Category: Central Banks

Chicago Pres. Evans speaking

Fed's Evan speaking in Chicago:
  • labor markets seem quite vibrant, drawing in more people
  • Fed is still debating what for employment means in current economy
  • We should tolerate inflation both above and below 2%
  • Currently considers US economy has very solid fundamentals
  • consumer still very strong. 
  • business investment weaker than expected
  • sees growth for 2019 around 2% which is close to what he regards as sustainable trend
  • business investment has been weaker despite fiscal aid
  • nervous about under running inflation objective
  • policy is currently about neutral but could be more accommodated if the aim was to lift inflation
  • A couple of rate cuts could lift inflation by 2021
  • Framework is adequate as long as policymakers are going to actively push for inflation of 2% to assure target is met symmetrically
  • Fed has a lot of inflation fighting credibility, with expectations firmly anchored
  • Hard for businesses to make long-term plans given uncertainty around trade landscape
  • slowing foreign growth is going to dampen the US economy
  • risk management approach means being a little more accommodative in case downside risks materialize, but we don't want to go too far
  • Agreed with December rate hike despite the uncertainty
  • Now am more concerned policy isn't on  accommodative side
  • Takes seriously the current rates may be more restrictive than should be
  • Could argue for rate cuts on inflation, global slowdown
The push me/pull me Fed speak with anxiety about business investment, and inflation rolling over,  but can't ignore the the strong labor market. He is nevertheless taking the path that a little inflation is ok despite the strong growth. And also that it is not just about US data dependency but the global data dependency.
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