By Steven K. Beckner
COLUMBIA, S.C. (MNI) – Chicago Federal Reserve Bank President
Charles Evans Monday said that the Fed would have to “adjust” monetary
policy if untoward events were to drive up inflation expectations and,
in turn, core inflation to levels inconsistent with the Fed’s statutory
“dual mandate.”
However, as things now stand, “substantial accommodation continues
to be appropriate” because unemploymnent is too high and inflation “too
low” relative to that mandate.
Evans, a voting member of the Fed’s policymaking Federal Open
Market Committee this year, said he has “bumped up” his forecast for
inflation by “a couple of tenths.”
But he said the amount of slack in the economy and the inability of
many firms to pass on higher costs is apt to keep inflation from rising
much in response to higher energy and food prices.
Meanwhile, Evans said, that even if the gross domestic product
grows by 4% as he expects it will be “quite a while” before the
unemployment rate returns to pre-recession levels.
Evans, in remarks prepared for delivery to the University of South
Carolina business school, said the economy has improved but said the
progress has been “disappointing” and said he is “not yet satisfied”
with the state of the economy.
-more-
** Market News International **
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