More from Chicago Fed President Charles Events. He warned that “at the moment, the risks from the downside scenarios loom larger than those from the upside ones”. And, “if activity softens more than expected or if inflation and inflation expectations run too low, then policy may have to be left on hold — or perhaps even loosened — to provide the appropriate accommodation to obtain our objectives.”
On the other hand, “if growth runs close to its potential and inflation builds momentum, then some further rate increases may be appropriate over time to ensure that the economy settles in on its long-run sustainable growth path and that inflation runs symmetrically about our 2 percent target”. He added “in this scenario, the path for rates will depend crucially on any signals of an acceleration in core inflation.”
Though, he emphasized that US economy is still in good shape. He pointed to Fed’s forecasts of 1.75-2.0% GDP growth in 2019. Evans said “the lower end of this range is actually in line with my view of the economy’s long-run growth potential. So we’re not looking at a bad number.” Though, “:the economy won’t feel like it is doing very well compared with last year’s very strong performance.”
