Chicago Fed president Evans speaking (2021 voting member)
- Accommodative policy has his full support
- Low risk of high persistent inflation in 2022 and beyond
- Recent increase in inflation not a precursor of undesirable high inflation
- Recent rise in inflation expectations welcome
- Inflation expectations not signaling inflation is spiraling out-of-control
- Will not be easy to cut through effects of temporary supply constraints to see underlying inflation dynamics
The comments are in line with the Fed's recent mantra. Although inflation is expected to rise and remain higher in 2021 due to reopening and base effects, the gains are seen as transitory and likely not to be consistent and persistent.
