Comments from the Chicago Fed President
- Unemployment is more like 9% or higher
- By the end of the year I expect unemployment around 5%
- The level of cases has come down, rollout of vaccines is very positive
- Doesn't see a great risk of inflation rising too quickly
- We're expecting relative price adjustments which are probably going to lead to inflation above 2% but the question is: Is it going to persist?
- Our experience has been that inflation doesn't respond to even the most vibrant labor market
- I really want to see above 2% inflation before I even think about raising rates
- It would be extraordinary if inflation got up to 3% but if it did, that would not be a real problem
- Structural rise in the power of labor vs capital could help wage growth
- Evans highlights operation twist. Says there will continue to be asset purchases until
- If the economic data were weaker and we thought we needed to provide more accommodation maybe we would focus more on the long end...but says he does not expect they'll have to change duration because of fiscal stimulus
- Says he shares the view that rising longer-term rates are a positive economic sign
- If markets think we're not going to live up to our pledges about waiting to raise rates, that creates a problem
- You never want to lose your credibility that you're going to deliver on your inflation objective then that is a problem
- 3% inflation might not a big problem if it's on its way back down. If it's on its way to 4%, that's a problem
- Not going to even think about QE taper until we see further substantial improvements
- We could continue with more of our policies if we needed to fight deflation, or we could extend duration
Absolutely no hint of more action from Evans. It would be a real shock if Powell hints at any more action tomorrow, as rumored.
