NEW YORK, March 20 — The Federal Reserve is on track to raise interest rates twice more this year after a policy tightening last week, and it could be more or less aggressive depending on inflation and fiscal policies from the Trump administration, a Fed rate-setter said today.
The public comments from Chicago Fed President Charles Evans were among the first since the US central bank lifted its policy rate a notch last week, as expected. It also forecast roughly two more moves in 2017 in a nod to low unemployment and some inflation pressures.
“Three is entirely possible,” Evans, speaking on Fox Business Network TV, said of hikes in 2017. “As I gain more confidence in the outlook I could support three total this year. If inflation began to pick up, that would certainly solidify (that expectation). It could be three, it could be two, it could be four if things really pick up.”
Asked about US President Donald Trump’s promise to boost the economy to a 4 per cent growth rate, from about 2 per cent in the last few years, Evans said: “Four per cent would be really an outsized number.”
While that level of growth could be reached “in any given year,” he said it was hard to imagine given the economy is already doing well, the labor market is “very strong,” and sectors like automobile sales are at all-time highs.
Evans, who is a voter on the Fed’s policy-setting committee this year and supported last week’s move, also echoed a comment from Fed Chair Janet Yellen on Wednesday that suggested the central bank could try to push inflation, now at 1.7 per cent, above a 2-per cent target.
“There is room to get inflation up to 2 per cent and in fact going beyond 2 per cent a little bit to make sure we get there, and that it’s a symmetric inflation objective, so that’s ok,” Evans said. — Reuters