Federal Reserve Bank of Chicago President Charles Evans elaborated today on his call from last week for the Fed to provide further monetary stimulus.
In a speech on Wednesday at the European Economics and Financial Centre’s Distinguished Speaker Seminar, Evans stated that “Given how truly badly we are doing in meeting our employment mandate, I argue that the Fed should seriously consider actions that would add very significant amounts of policy accommodation. Such further policy accommodation does increase the risk that inflation could rise temporarily above our long-term goal of 2%.”
He went on to say that “The economic outlook clearly has deteriorated this year,” small businesses and consumers are having a difficult time securing credit, and that the recovery in the housing market is “painstakingly slow.”
The Chicago Fed President is generally viewed as one of the most dovish members of the Federal Open Market Committee (FOMC), along with Chairman Ben Bernanke.
He also floated the idea of having the Fed include its FOMC statement a new proposal that would keep the Fed funds rate at “extraordinarily low levels” until unemployment declines to 7.0-7.5%, as long as medium-term inflation stays below 3.0%.