TV interview with Federal Reserve Bank of Chicago President Charles Evans
In an interview with Bloomberg's Michael McKee, which aired on Bloomberg Surveillance, Federal Reserve Bank of Chicago President Charles Evans says he doesn't see inflation rising to 2% "for a few years." He says he sees pressures holding down inflation and sees "many signs of continued resource slack."
On inflation outlook and recent forecasts:
"Inflation, I think that the underlying fundamentals continue to indicate to me, my inflation outlook is for 1.5 to 1.75 for a couple of years. And I don't expect to get up to 2 percent for a few years."
"So I think there continues to be pressures that are going to hold that down. If we get above 2 percent, then that will be a sign that things are doing better I think. And you know, frankly, it is not a catastrophe to overshoot inflation by some amount. Two percent is our target; that does not mean we have to stay below 2 percent.. We need to average 2 percent. So even a 2.4 percent inflation rate, if it's reasonably well-controlled and the rest of the economy is doing OK and then policy is being adjusted in order to keep that within the, you know, under 2.5 percent range, I think that can work out."
On when inflation starts to be affected by unemployment:
"I think it is more like the normal rate that we used to think of before the crisis, something in the 5 to 5.25 percent unemployment rate. That's what I take to be the sustainable rate, so at 6.1 percent we still have quite a ways to go."
On resource slack:
"I think that the low wage growth to date is indicative of that as well. Plus the lower inflation. So I think there are many signs of continued resource slack."