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.
