A later liftoff from near-zero interest rates will better help the U.S. economy navigate through uncertain economic trends, a top Federal Reserve official said Monday.
In prepared remarks at Marquette University, Chicago Federal Reserve President Charles Evans contended normalizing policy too early brings risks amid pressure on inflation from low energy prices and “subdued” wage growth. The Fed would need to normalize gradually after the first hike to avoid shaking markets further, he said.
The Fed’s policy-making committee held off on raising its short-term interest rate target at its September meeting amid rocky stock markets and concerns about a global slowdown. Evans is a voting member on the committee.
On Monday, Evans contended that inflation headwinds from energy prices and a stronger U.S. dollar will likely not subside until the middle of next year. He noted that he was “fairly confident” the U.S. economy will reach the central bank’s goals for employment within a “reasonable period,” but was much less certain about inflation moving toward its 2 percent target quickly.
