Fed's Evans: Three 2017 Rate Rises Plausible, Four Possible if Inflation Picks Up
March 27 2017 - 5:40PM
Dow Jones News
By Jeannette Neumann and Michael S. Derby
Federal Reserve Bank of Chicago President Charles Evans said the
U.S. central bank could raise short-term interest rates four times
this year if inflation picks up, but suggested three increases
remain more plausible.
"At the moment, I don't see the data, I don't have the
confidence" for four rate increases in 2017, he said at an event
held in Madrid by the Global Interdependence Center. "If I thought
that I was inclined to four rate hikes for 2017, I would presumably
be seeing a much stronger lift in inflation."
Mr. Evans said long-term inflation expectations in the U.S. are
running below the central bank's 2% target, even though short-term
prices are nearing that objective.
The failure of the health-care bill that was backed by
Republican House leaders adds to the uncertainties confronting the
U.S. economy, Mr. Evans said. U.S. trade policy is another area of
uncertainty. "We're waiting in the U.S., as around the world, for a
better articulation of exactly what the trade policies will be," he
said.
Mr. Evans is a voting member of the interest-rate-setting
Federal Open Market Committee this year. Earlier this month, the
FOMC, with Mr. Evans's support, boosted short-term interest rates
for the first time this year and the third time since the financial
crisis, lifting its overnight target rate range to 0.75% to 1%.
Fed officials have signaled more rate increases are likely as
the year progresses given the current vigor of the economy and
their expectation that inflation will continue to tick back up
toward the official target of 2%, amid more gains in hiring.
Mr. Evans was once on the side of those who are skeptical of the
push to raise rates when inflation is under the central bank's
desired level. But lately Mr. Evans has said the Fed's projected
path of rate rises, which holds for about two more increases this
year after the recent boost, looks appropriate to him.
A week ago, in a television interview, Mr. Evans said that "if
the growth outlook solidifies and I have more confidence inflation
is going up, three [rate increases] for the entire year is entirely
reasonable. It could be less if there's more inflation uncertainty
or it could be more if things are stronger than that."
The Chicago central banker is the first official to speak in a
busy week for public commentary by Fed officials. Fed Chairwoman
Janet Yellen is due to speak Tuesday, and many regional Fed bank
leaders also will be weighing in.
Almost all central-bank commentary recently has been in support
of rate rises, although the Minneapolis Fed chief Neel Kashkari has
served as a voice of opposition, saying economic data suggest no
urgency to act now.
Write to Jeannette Neumann at jeannette.neumann@wsj.com and
Michael S. Derby at michael.derby@wsj.com
(END) Dow Jones Newswires
March 27, 2017 18:25 ET (22:25 GMT)
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