In an online meeting of the American Economic Association, Chicago Fed President Charles Evans said that “if we got 3% inflation that would not be so bad,” if it’s not accelerating out of control. Also, with structurally low interest rates pulling down on inflation, “it is very difficult to imagine out of control inflation, even with the large debt that fiscal authorities have been running up.”

In the prepared remarks, Evans also said financial stability objectives are ” best addressed through supervision and regulation rather than through monetary policy tools”.

“The reality that the effective lower bound is no longer an unusual occurrence prompted the FOMC to embark on a comprehensive review of its monetary policy framework and make changes in our monetary policy strategy”, he added.

“Perhaps it is time for financial institutions and their supervisors to do the same—that is, review their business models and make their supervisory and regulatory strategies as robust and resilient as possible—in this low nominal interest rate environment.”

Full remarks here.

In a speech, Chicago Fed President Charles Evans said if Fed tries to “fine-tune a very modest inflation overshoot of only a tenth or two, we run a very large risk of failing to achieve our 2 percent averaging goal within any reasonable amount of time”.

For him, “getting inflation moving up with momentum and delivering rates around 2-1/2 percent is important for achieving on our inflation objective in as timely a manner as possible.”

Bottom line is, it will “take a long time” for average inflation to reach 2%. “To meet our objectives and manage risks, the Fed’s policy stance will have to be accommodative for quite a while. Economic agents should be prepared for a period of very low interest rates and an expansion of our balance sheet as we work to achieve both our dual mandate objectives.”

Full speech here.

Atlanta Fed President Raphael Bostic said in a Reuters interview he’s “hopeful” that moving into 2021, “signals for weakness start to dissipate and the conversation turns consistently and robustly to sort of steady and broad-based growth.”

“If we determine things have strengthened appreciably, that we have made significant progress, then we will think about the next appropriate action,” he added.

That is, if enough progress were made, Fed could start to bring its asset holdings back to a level “more inline” with the pre-pandemic levels. “I am hopeful that in fairly short order we can start to recalibrate.”

In a speech, Cleveland Fed President Loretta Mester said “prospects are good for a much more favorable 2021” with vaccines distribution underway and further fiscal relief. Though, “the next few months will be challenging ones” with increasing new cases of coronavirus, which are “putting strains on our healthcare system and limiting economic activity. ”

She added that “so far the recovery has generally been stronger than anticipated”. This suggests that “we may have been underestimating the economy’s resilience and underlying momentum, as well as the ability of households and businesses to adapt to this unprecedented environment.” Recovery is expected to continue, but uneven over the year.

The post-vaccination phase of recovery is expected to “continue over the next few years, with growth above trend, declines in the unemployment rate, and gradually rising inflation”.

Overall, “monetary policy will need to remain highly accommodative for quite some time because achieving our monetary policy goals is likely to be a journey and not a sprint… The FOMC is, and will remain, fully committed to using our policy tools to achieve our goals, in support of a broad-based and sustainable recovery.”

Full speech here.