'With unemployment high, and inflation very low, I'd say accommodation is very important,' Evans said in an interview on Chicago public television station WTTW.
The Fed lowered its key short-term interest-rate target to near zero in December 2008 and vowed to keep rates extraordinarily low for an 'extended period.' It also pumped more than $1 trillion into the economy through purchases of mortgage-backed securities to stave off the worst downturn in decades.
The central bank's policy-setting Federal Open Market Committee will meet next week, when it is widely expected to leave intact its pledge to keep rates low for an extended period. One member of the panel has dissented twice already, however, and investors are watching to see if more join.
'At the moment the inflationary environment is most unusual,' Evans, who is not a voting member of the FOMC this year, said in the televised interview, noting that core inflation is running at about 1.3 percent, lower than his target of 2 percent.
'On the one hand some people think that there is strong inflationary pressure because there is so much accommodation in place. On the other hand, resource slack is so strong, unemployment is so high, that businesses cannot pass along input price increases, and so that means that there won't be price increases under those scenarios and inflation is actually quite low.'
(Reporting by Ann Saphir; Editing by Gary Hill)
((ann.saphir@thomsonreuters.com; +1-312-408-8592; Reuters Messaging: ann.saphir.reuters.com@reuters.net))
Keywords: USA FED/EVANS
CHICAGO, April 19 (Reuters) - The U.S. economic recession is definitely over but the Federal Reserve should still keep interest rates low to nurture recovery, Chicago Fed President Charles Evans suggested on Monday.
'With unemployment high, and inflation very low, I'd say accommodation is very important,' Evans said in an interview on Chicago public television station WTTW.
The Fed lowered its key short-term interest-rate target to near zero in December 2008 and vowed to keep rates extraordinarily low for an 'extended period.' It also pumped more than $1 trillion into the economy through purchases of mortgage-backed securities to stave off the worst downturn in decades.
The central bank's policy-setting Federal Open Market Committee will meet next week, when it is widely expected to leave intact its pledge to keep rates low for an extended period. One member of the panel has dissented twice already, however, and investors are watching to see if more join.
'At the moment the inflationary environment is most unusual,' Evans, who is not a voting member of the FOMC this year, said in the televised interview, noting that core inflation is running at about 1.3 percent, lower than his target of 2 percent.
'On the one hand some people think that there is strong inflationary pressure because there is so much accommodation in place. On the other hand, resource slack is so strong, unemployment is so high, that businesses cannot pass along input price increases, and so that means that there won't be price increases under those scenarios and inflation is actually quite low.'
(Reporting by Ann Saphir; Editing by Gary Hill) Keywords: USA FED/EVANS (ann.saphir@thomsonreuters.com; +1-312-408-8592; Reuters Messaging: ann.saphir.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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