The Fed’s Evans says policy has been “wrong-footed”, but may not have to be restrictive

© . FILE PHOTO: Chicago Federal Reserve Bank President Charles Evans looks on at the Global Interdependence Center Members Delegation Event in Mexico City, Mexico, Feb. 27, 2020. REUTERS/Edgard Garrido/File photo by Howard Schneider NEW YORK () – Current high inflation requires a ” substantial repositioning” of the Federal Reserve’s policy, but not so much that it will constrain the economy and destroy jobs, Charles Evans, president of the Chicago Fed, said Friday. Evans explained in prepared remarks that price pressures will still ease on their own without aggressive Fed rate hikes. He did not detail what he thinks the Fed should do at its meetings in March or throughout the year thereafter, or venture into the debate over whether officials should start with a more-than-usual half-point increase. to jump-start the process. But he said his comments were intended to “discipline the narrow conjectures that the world is about to end,” with the Fed losing control of inflation and risking sharp rises in unemployment or even a recession. recession to bring it under control. “Our current monetary policy setting has been misguided in the face of the current sharp rise in inflation,” Evans said at a conference hosted by the Booth School of Business at the University of Chicago. But if we take out the pandemic and supply chain effects, which are likely to fade, “my reading of underlying inflation still appears to be well anchored at levels consistent with the Fed’s 2 percent average target,” he said. he. As a result, “I see our current policy situation as likely to require less eventual financial restraint compared to previous periods and pose less risk” to jobs and growth than was necessary to resolve bouts of inflation in the 1970s and 1980s, he said. . “We don’t know what’s on the other side of the current inflation spike… We may be looking again at a situation where there’s nothing to fear to keep the economy warm,” and take advantage of employee benefits, he said. † Evans commented on a paper held at the same conference that noted the benefits of a new Fed strategy. That strategy, which Evans helped author, seeks to generate job gains by taking on more risk with higher inflation. The price hikes during the pandemic have called that approach into question. Disclaimer: Fusion Media would like to remind you that the data on this website is not necessarily real-time or accurate. All CFDs (Stocks, Indices, Futures) and Forex prices are not provided by exchanges but rather by market makers, and therefore prices may not be accurate and may differ from the actual market price meaning prices are indicative and not suitable for trading purposes . Therefore, Fusion Media does not bear any responsibility for any trading losses that you may incur as a result of using this data. Fusion Media or anyone associated with Fusion Media accepts no liability for any loss or damage resulting from reliance on any information, including data, quotes, charts and buy/sell signals on this website. Be fully informed about the risks and costs associated with trading the financial markets, it is one of the riskiest forms of investment possible.

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