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.”
