Fed's Evans Said Good Job Market Recovery Is Real Possibility
September 23 2020 - 11:51AM
Dow Jones News
By Michael S. Derby
Federal Reserve Bank of Chicago leader Charles Evans said a
strong recovery in the job market remains possible for the U.S., as
he pushed back against the idea he has a different take from his
colleagues on the path for future rate rises.
Mr. Evans said central bank policy, with near zero rates and the
expectation they'll stay there for several years to come, coupled
with asset buying, is set "quite appropriately" for the challenges
facing the nation. This level of support will help the economy over
time, but Mr. Evans also said that other things are even more
powerful given the nature of the coronavirus pandemic: "Fiscal
policy support and improved public safety are really the key
elements" to get the economy back on track.
Mr. Evans said he believes what's now a 8.4% unemployment rate
could fall to 7% by the end of this year, and to 5.5% by the end of
next year, but he added that rapid recovery does depend on some
amount of fiscal support.
"I have been surprised the U.S. economy has been as resilient
since June as it has," Mr. Evans said given the renewed virus
outbreaks. "One way or another, for good or bad, we seem to be
powering through 200,000 deaths of American people, and we are
trying to keep people safe as we go through and produce and all of
this. I might have thought there'd be a little more concern in
terms of consumer confidence. But the economy has done better than
that," Mr. Evans said.
The policymaker said he was on board with the Fed's new guidance
that said the central bank will keep rates at near zero levels
until maximum job growth is attained, and inflation has hit 2% and
is on track to moderately overshoot that goal. He added going over
2% is important and going up to 2.5% would not be a problem from
his perspective, and that it would likely even be necessary.
Mr. Evans also said he doesn't see much to be gained by
increasing the Fed's pace of asset buying but he said that could
change in the future. Mr. Evans also said massive U.S. deficits
right now are necessary to provide aid in crisis and he sees no
issues financing that red ink.
Write to Michael S. Derby at michael.derby@wsj.com
(END) Dow Jones Newswires
September 23, 2020 12:36 ET (16:36 GMT)
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