Fed's Evans Isn't Ready to Call for Changes in Monetary Policy -- Update
By Michael S. Derby
Federal Reserve Bank of Chicago President Charles Evans said
that although the latest data on the labor market is disappointing,
he wasn't yet ready to call for changes in central-bank monetary
The official repeated on Friday that government aid is the
quickest way to deliver new support to the U.S. economy.
The November data, which showed moderating levels of job
creation, was "weaker than I was expecting," Mr. Evans told
reporters after remarks to a Michigan banking group.
"I don't believe it's changed my assessment that the most
important source of stimulus for the economy over the next few
months is some type of fiscal support and increase in public health
safety support," Mr. Evans said. "I think that that would be
quicker. I think that that's most relevant at the moment" compared
with actions the Federal Reserve could take.
Fed officials have broadly called for another round of
government aid as the coronavirus pandemic ranges on, amid surging
infections, but so far elected officials have failed to deliver
That has raised questions whether the Fed will have to do more
to help the economy. With rates near zero and unable to be lowered
further, that has led many to look to the Fed's already massive
bond-buying effort as a place where the central bank could act.
Mr. Evans, who doesn't have a voting role on the rate-setting
Federal Open Market Committee, said he isn't yet ready to make
changes in what is a highly uncertain time.
"I am comfortable with our current setting for asset purchases,
and I would be comfortable with that, presumably, for the next
several months until we get to more clarity on what the economic
situation is going to be, I think in the spring," Mr. Evans said.
"I'm not opposed to more accommodation. I'm just not exactly sure
what the right timing is."
Mr. Evans said that while the economy, which recovered more
quickly than he had anticipated, is facing renewed threats because
of the rise of Covid-19 cases, the swift arrival of vaccines adds
hope to the longer-run picture.
"This is a very unusual period where you can have more optimism
about six months from now, middle of next year, and still need to
be mindful that things are very precarious, still, at the moment,"
Mr. Evans said again that the likelihood it will take some time
for inflation to exceed the Fed's 2% target means it would be years
before the central bank will be able to lift its short-term target
rate range off the near zero it has been at since March, when the
pandemic started taking hold.
"I do not expect that the short term policy rate, the federal
funds rate is going to be increased until we've got inflation up to
2%. Currently, I still think that won't be before 2023, probably
2024, even," Mr. Evans said.
Write to Michael S. Derby at firstname.lastname@example.org
(END) Dow Jones Newswires
December 04, 2020 12:19 ET (17:19 GMT)
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