By Jeannette Neumann and Michael S. Derby 

Federal Reserve Bank of Chicago President Charles Evans said the U.S. central bank could raise short-term interest rates four times this year if inflation picks up, but suggested three increases remain more plausible.

"At the moment, I don't see the data, I don't have the confidence" for four rate increases in 2017, he said at an event held in Madrid by the Global Interdependence Center. "If I thought that I was inclined to four rate hikes for 2017, I would presumably be seeing a much stronger lift in inflation."

Mr. Evans said long-term inflation expectations in the U.S. are running below the central bank's 2% target, even though short-term prices are nearing that objective.

The failure of the health-care bill that was backed by Republican House leaders adds to the uncertainties confronting the U.S. economy, Mr. Evans said. U.S. trade policy is another area of uncertainty. "We're waiting in the U.S., as around the world, for a better articulation of exactly what the trade policies will be," he said.

Mr. Evans is a voting member of the interest-rate-setting Federal Open Market Committee this year. Earlier this month, the FOMC, with Mr. Evans's support, boosted short-term interest rates for the first time this year and the third time since the financial crisis, lifting its overnight target rate range to 0.75% to 1%.

Fed officials have signaled more rate increases are likely as the year progresses given the current vigor of the economy and their expectation that inflation will continue to tick back up toward the official target of 2%, amid more gains in hiring.

Mr. Evans was once on the side of those who are skeptical of the push to raise rates when inflation is under the central bank's desired level. But lately Mr. Evans has said the Fed's projected path of rate rises, which holds for about two more increases this year after the recent boost, looks appropriate to him.

A week ago, in a television interview, Mr. Evans said that "if the growth outlook solidifies and I have more confidence inflation is going up, three [rate increases] for the entire year is entirely reasonable. It could be less if there's more inflation uncertainty or it could be more if things are stronger than that."

The Chicago central banker is the first official to speak in a busy week for public commentary by Fed officials. Fed Chairwoman Janet Yellen is due to speak Tuesday, and many regional Fed bank leaders also will be weighing in.

Almost all central-bank commentary recently has been in support of rate rises, although the Minneapolis Fed chief Neel Kashkari has served as a voice of opposition, saying economic data suggest no urgency to act now.

Write to Jeannette Neumann at jeannette.neumann@wsj.com and Michael S. Derby at michael.derby@wsj.com

(END) Dow Jones Newswires

March 27, 2017 18:25 ET (22:25 GMT)