By Steven K. Beckner
Chicago Fed President Charles Evans, another FOMC voter, is no
longer saying that additional quantitative easing is needed, but has
made clear he’s in no hurry to raise the federal funds rate from near
zero or to start shrinking the balance sheet.
“At present, we’re underrunning both our inflation objective and
our employment objective — both call for monetary policy
accommodation,” Evans said on April 15.
“As long as core inflation year-over-year is 1.5% or lower, I am
extremely doubtful that we’ll need an adjustment to monetary policy,”
Evans said.
While there has been a shift in sentiment toward greater awareness
of inflation, well-informed sources have told MNI that it would take a
significant increase in upside risks to persuade an FOMC majority to
begin tightening monetary policy so long as unemployment remains high.
So the FOMC is unlikely to make any significant changes in policy
at this meeting.
Confirming a trend that MNI had been reporting since early
February, the FOMC elevated its concern about inflation at its March 15
meeting. “The recent increases in the prices of energy and other
commodities are currently putting upward pressure on inflation,” it
said. “The Committee expects these effects to be transitory, but it will
pay close attention to the evolution of inflation and inflation
expectations.”
But there has been no indication from public or private official
comments that the FOMC is prepared to go much beyond that in its April
27 policy statement. And it would be surprising if Bernanke materially
changes his view of the economic or policy outlook.
Still, covering his first post-FOMC press conference will
certainly be an event.
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** Market News International **
[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$,M$$BR$]
