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3/29/2017, 3:23 PM (Source: TeleTrader)
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Fed voter Evans open for one or two more hikes

An inflation rate of 2.5% for a while would still be fundamentally in line with the objective of the United States Federal Reserve, according to Charles Evans, who heads the central bank's subsidiary in Chicago. Speaking in Frankfurt on Wednesday, he explained the target 2% can be "assuredly" reached "faster and with momentum," and stressed the risk is acceptable. Evans said levels of inflation, growth and employment allow for one or two more quarter-point increases in the benchmark interest rate, while that the median assessment among the participants in the Federal Open Market Committee is two hikes.

The Chicago Fed president and chief executive, this year's voting member of the policymaking panel, said he sees upside risks to growth "for the first time in quite a while." "If economic growth and inflation expectations pick up so that core inflation rises more strongly than I expect, a sturdier economy would be able to handle a steeper path of rate increases," he stated in prepared remarks. 

Conversely, a drop in inflation wouldn't warrant slashing rates, but the Fed could simply include a lowered pace of tightening in its forward guidance, the central banker underscored. "Large balance sheets are controversial. Criticism is fine, is expected, and is a normal part of being accountable for goals-based monetary policy. Still, future committees may have to relearn how to take necessary but unpopular actions," Evans added.

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