Charles Evans, the generally dovish head of the Federal Reserve Bank of Chicago, said Wednesday he would back “another one or two increases” to short-term interest rates this year.
Mr Evans, who is a voting member of the rate-setting Federal Open Market Committee this year, is the latest central-bank speaker in recent days to reinforce the Fed’s earlier prediction that the US could be in store for about three increases in key rates in 2017. The bank already acted to lift the rate once already this year, at its March 14-15 meeting.
Mr Evans said in a speech before the DZ Bank-OMFIF International Capital Markets Conference in Frankfurt, Germany, that he believed the Fed had made progress towards its dual mandate of supporting full employment and price stability. With unemployment “close to what the committee judges to be a mandate-consistent level” and an “improved” inflation outlook, Mr Evans said:
“These are important considerations to help explain why I supported our recent rate increase and why my current dual mandate outlook allows me to support another one or two increases this year.”
Nevertheless, he cautioned that “uncertainties and risks remain”, particularly as sustainable economic growth in the US remains lower than Fed policymakers would prefer.
Yesterday, Fed vice-chair Stanley Fischer said two more rate increases in 2017 would be “about right”, while John Williams, head of the San Francisco head and a non-voting member of the Fed’s policy-setting board, told the Wall Street Journal in an interview last week that three or “even four” rate increases this year “makes sense” given the strength of the economy.
Mr Evans’ comments kick off what is set to be another busy day of Fed talk, with Boston Fed president Eric Rosengren set to speak on the economic outlook later this morning, and San Francisco’s Mr Williams on deck this afternoon for a presentation in New York.