Chicago Fed President Charles Evans said yesterday, “I do not fear stronger accommodation in the pursuit of clearly overshooting 2%, even to the point of 2-1/2, or even a little bit more”. Inflation at 2.5% for some time is “in the cards” if Fed is doing its job right.
As for monetary policy, Evans said it’s premature to ramp up Fed’s asset purchases at this point. Fed should wait until the economy gets into better shape, including having unemployment closer to 6%, while consumers are more comfortable spending their money. When that happens, “we would have a better idea of the right amount of accommodation and the way to deliver it,” Evans said.
