By Michael S. Derby 

Federal Reserve Bank of Chicago President Charles Evans said Friday he expects the U.S. central bank to press forward with rate rises amid a bright economic outlook.

"The U.S. economy is firing on all cylinders, with strong growth, low unemployment, and inflation approaching our 2 % symmetric target on a sustained basis," Mr. Evans said in the text of speech prepared for delivery in Ft. Wayne, Ind. "I expect this good performance to continue over the next few years."

Mr. Evans said "given the strong growth fundamentals and positive inflation outlook, it is time for the Fed to return to the conventional monetary policymaking of yesteryear." For him, that means policy "will will rely on gradual adjustments in interest rates."

Mr. Evans again noted that monetary policy will likely have to go toward a stance that's somewhat restrictive of growth, but he said that's "quite normal" given how the economy is and will likely perform.

Mr. Evans, who is not currently a voting member of the interest-rate setting Federal Open Market Committee, did not discuss the timing of action. The Fed meets later this month in a gathering that's almost certain to result in an increase to the current fed funds rate target, which now stands between 1.75% and 2%. There's a good chance the Fed will raise again after that this year, and raise several more times next year.

Mr. Evans said in his speech he expects the economy to grow by around 3% this year and to slow back to around 2% over 2019 and 2020 as the stimulative impact of the recent tax cuts wears off. He sees what's current a 3.9% jobless rate ebbing to around 3.5% by the end of 2020.

Mr. Evans said inflation is likely to edge up over the Fed's 2% inflation target. But he added, "I am more comfortable with the inflation outlook today than I have been for the past several years."

The official sees the strong job market contributing to higher inflation.

"While wage increases have been disappointingly low, more and more of my business contacts -- including those in Indiana -- say they are willing to increase compensation to hire or keep qualified workers," Mr. Evans said. "So I expect tighter labor markets to lead to higher wage growth before too long," he said.

Write to Michael S. Derby at michael.derby@wsj.com<mailto:michael.derby@wsj.com>

Write to Michael S. Derby at michael.derby@wsj.com

(END) Dow Jones Newswires

September 14, 2018 09:15 ET (13:15 GMT)