Chicago Fed Pres. Charles Evans speaking
- on basis of the low US inflation alone, July interest rate cut was justified and more policy accommodation needed
- economic headwinds mean cutting rates further could be reasonable
- brinkmanship trade negotiations mean volatility, we have to be paying attention
- could also argue that risk management calls for more accommodation
- he sees midcycle adjustment as Fed now aiming for 50 basis points below neutral rate, rather than 50 basis points above
- long-run neutral rate is 2.75%, could be lower now because of headwinds
- looking at data, business commentary to determine whether more accommodation needed
- he took note of overnight rate cuts in Asia, will be digesting everything that's going on
- he still expects 2.25% US GDP growth this year
- US labor market still looks good; a slowdown would pose risks to growth
- inflation outlook along calls for more accommodation
- Fed can pursue accommodative stance with current inflation
- Could take view that events have created more headwinds
Feds Evans is a signaling support for lowering the Fed funds rate further. Evans is a voting member.
