Couple of rate cuts may help inflation – Fed's Evans

Friday, 12. July 2019 16:48

The consumer in the United States is "still very strong" but global economic slowdown is weighing on the United States, the president and chief executive of the Federal Reserve Bank of Chicago said on Friday. Speaking at a conference organized by the Pacific Pension and Investment Institute, Charles Evans also cited trade uncertainty making long-term planning difficult for companies and pointed to a potential brightening in sentiment if the USMCA, the free-trade deal agreed with Mexico and Canada, is passed. This year's voting member on the Federal Open Market Committee asserted he is worried about the inflation's weakness and suggested "a couple" of moves downward in interest rates could get it back up to target 2% by 2021.

The Fed's standard boosts to the benchmark target were 0.25 percentage points each in the past four years. Evans estimated the current policy stance is neutral and stressed inflation both higher and lower than 2% should be tolerated, supporting the central bank's strategy for a so-called symmetrical approach. He said economic growth for this year would come in at 2% and added the rate is at the potential level for the country.

The policymaker praised the strength of the labor market and overall "solid fundamentals" but acknowledged the weakness in corporate investment.

Related Links: 
Breaking the News / IT