Chicago Fed president Evans to retire in 2023
The outgoing Chicago Fed Pres. Charlie Evans is speaking and says:
- US can lower inflation relatively quickly without recession or large increase in unemployment
- sees target rate needing to rise a bit above 4.5% by early next year and remaining there as Fed takes stock
- Fed needs to carefully and judiciously navigate to reasonably restrictive policy rate
- many risk could derail Fed hopes for soft landing including Ukraine war, slow supply improvement, Covid, and monetary policy either not fixing inflation or weighing more than expected on jobs
- without a period of restrictive policy to restrain demand, inflation would not fall to anything near 2% target
- may be that labor shortages are having an unusually large influence on inflation which could allow fast improvement on inflation as economy calls
- good news that longer horizon inflation expectations have generally remained within range consistent with 2% target