BEIJING (MNI) – It will be “a while” before the Federal Reserve can
safely consider tightening monetary policy, Chicago Federal Reserve Bank
President Charles Evans suggested in an interview with the Financial
Times published Wednesday.
“While I’m very pleased at the improvements in the economy I think
it’s going to continue to be a while before we’re safely past these
(adverse economic) conditions,” Evans told the FT.
Evans is a voting member of the Fed’s policy-making Federal Open
Market Committee. The comments by Evans, considered one of the most
dovish members of the panel, stand in contrast to more hawkish comments
by other FOMC members and point to a sharp divergence of opinion on the
panel this year.
For example, directors of the Federal Reserve Banks of Dallas and
Kansas City sought a 25 basis point increase in the primary credit rate
at which financial institutions borrow through the Fed’s discount window
in January, according to Federal Reserve Board minutes released Tuesday.
The majority of the panel, however, agreed to maintain the rate at its
current 0.75%.
Financial markets continue to speculate whether the Fed will
tighten policy as early as later this year in view of recent stronger
economic data and the FOMC’s own more upbeat economic forecasts for this
year published earlier this month.
But Evans said that U.S. inflation was still very low and monetary
policy should stay accommodative until the risks to the economy have
eased further.
“The message that comes out of what I think of as high-quality
research on this subject is that policy ought to remain accommodative
for really quite a while, even a while after conditions start to
improve,” he said.
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