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Chicago Federal Reserve President Charles Evans on Friday said he continued to support steady quarter-percentage point increases in the Fed’s benchmark interest rater until next March.
Such a path of would raise the benchmark Fed funds rate to about 2.5%, which Evans said is a “neutral” rate that neither boosts or dampens growth.
Steady quarter-point rate hikes was the policy path laid out by the median of Fed officials after their policy meeting last month.
Since then, talk of a series of half- point rate hikes has grown louder. Many Wall Street economists seem to be trying to outdo one another with hawkish forecasts.
Traders in the Fed fund futures market now expect the U.S. central bank to get its policy rate to 2.5% by December.
In a roundtable with reporters Friday, Evans said he didn’t understand the stampede.
“I don’t have any reason to appreciate why the most recent March SEP dot chart has become stale all of a sudden,” Evans said.
Evans said half-point rate hikes would get the Fed to neutral faster, perhaps by December compared with his forecast of March.
“I don’t see that as being a big risk,” he said.
Evans said moving gradually would give the Fed the chance to look at how inflation pressures and whether supply chain woes are easing.
The supply chain effect unwind is what everybody is counting on to get consumer price inflation down from 7.9% rate, Evans said.
Still, Evans would not entirely rule out backing a more aggressive policy path.
“It could easily be the case that circumstances are such that you’re going quicker than what I submitted in March would be appropriate,” he said.
Evans spoke to reporters after giving a speech Friday morning. He said he hadn’t had time to review the March jobs report to give an informed reaction. The economy added 431,000 jobs in the month and the unemployment rate fell to 3.6%.
Stocks
DJIA,
SPX,
were slightly higher after the strong March jobs report. The yield on the 10-year Treasury note
TMUBMUSD10Y,
rose to 2.4%.
