By Michael S. Derby

Federal Reserve Bank of Chicago leader Charles Evans said Wednesday a strong recovery in the job market remains possible for the U.S.

The central bank's policy, with near zero rates and the expectation they'll stay there for several years to come, coupled with asset buying, is set "quite appropriately" for the challenges facing the nation, Mr. Evans said in a virtual appearance. The official also said other government actions are even more powerful given the nature of the coronavirus pandemic: "Fiscal policy support and improved public safety are really the key elements" to get the economy back on track.

Mr. Evans said he believes what's now an 8.4% unemployment rate could fall to 7% by the end of this year, and to 5.5% by the end of next year. But he added that rapid recovery does depend on some amount of fiscal support.

"I have been surprised the U.S. economy has been as resilient since June as it has," Mr. Evans said, given the renewed virus outbreaks. "One way or another, for good or bad, we seem to be powering through 200,000 deaths of American people, and we are trying to keep people safe as we go through and produce and all of this. I might have thought there'd be a little more concern in terms of consumer confidence. But the economy has done better than that," Mr. Evans said.

The policymaker said he was on board with the Fed's new guidance that the central bank will keep rates at near zero levels until maximum job growth is attained, and inflation has hit 2% and is on track to moderately overshoot that goal. He added that going over 2% is important and going up to 2.5% wouldn't be a problem from his perspective, and that it would likely even be necessary.

Mr. Evans said he doesn't see much to be gained by increasing the Fed's pace of asset buying but that it could change in the future. The official also said massive U.S. deficits right now are necessary to provide aid in the coronavirus crisis and that he sees no issues financing that red ink.

Write to Michael S. Derby at michael.derby@wsj.com

(END) Dow Jones Newswires

September 23, 2020 14:02 ET (18:02 GMT)

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