Evans Calls for Further Fed Stimulus to Reduce U.S. Unemployment to 7.5%
By Vivien Lou Chen and Svenja O’Donnell
Bloomberg.com
Sep 7, 2011 1:59 PM ET
Federal Reserve Bank of Chicago President Charles Evans said the central bank should move “aggressively” to reduce unemployment, even at the cost of temporarily pushing inflation higher.
The Fed’s current commitment to record-low interest rates should be made contingent on pushing the unemployment rate to around 7 percent or 7.5 percent, as long as inflation stays below 3 percent in the medium term, the 53-year-old regional bank chief said today in a speech in London.
“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,” he said. “Such further policy accommodation does increase the risk that inflation could rise temporarily above our long-term goal of 2 percent.”
The speech places the Chicago Fed president among the “few” members of the Federal Open Market Committee who, according to minutes of the FOMC’s gathering in August, favor a “more substantial move” beyond the central bank’s pledge to hold rates low for about two years. Evans, among the FOMC’s most outspoken advocates of easing since last year, voted for the FOMC’s Aug. 9 commitment to keep the overnight lending rate between banks near zero through at least mid-2013.
New Trigger
His support for a new trigger to be added to the central bank’s statement goes beyond the easing publicly supported by most Fed officials, and is an acknowledgment of the weakness of the world’s largest economy almost a year after the Fed committed to a second round of bond purchases to spur growth.
Full story: http://www.bloomberg.com/news/2011-09-07/evans-calls-for-further-fed-stimulus-to-reduce-u-s-unemployment-to-7-5-.html
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