Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Fed's Evans: 'A couple' of rate cuts may help boost inflation

EconomyJul 12, 2019 12:46PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Chicago Federal Reserve Bank President Evans visits the online music retailer Sweetwater in Fort Wayne

By Howard Schneider

CHICAGO (Reuters) - The Fed should cut interest rates by half a percentage point before the end of the year to boost persistently weak inflation and convince the public that policymakers are serious about their 2 percent inflation target, Chicago Federal Reserve president Charles Evans said on Friday.

"Inflation expectations seem to me to be anchored a little bit below a level consistent with our two percent objective, and it has been stubborn like that," said Evans, currently a voting member of the Fed's rate setting committee. "That tells me our current setting for policy is a little bit on the restrictive side...I need a couple of rate cuts...in order to get the inflation outlook up."

The Fed meets later this month and is widely expected to make a cut of at least a quarter of a percentage point.

Evans' comments expand on what has become a broad set of reasons for the Fed to cut rates, each providing a different set of policymakers a rationale for lowering borrowing costs even with unemployment near a record low and, by most accounts, the economy growing at a healthy pace.

In testimony before Congress this week, Fed chairman Jerome Powell focused on risk management, and buttressing the U.S. against slowing global growth and a shock to business confidence in May following a spike in world trade tensions.

Others have argued for lower rates as a boon to workers that the Fed should push to its limits. There have been more abstract justifications as well around a perceived fall in the "neutral" rate of interest, which by implication means the Fed's current target policy rate is more restrictive than previously estimated.

If that amalgamation of reasons has helped a consensus emerge, Evans says he thinks the Fed's need to "ratify" its commitment to the inflation target would on its own warrant a policy shift.

While there may be doubt that lower interest rates alone would lift the pace of price increases, he said a rate cut at this point would help to lift expectations and show that the Fed takes its inflation target seriously.

In his estimation a half a percentage point reduction now would help lift inflation to 2.2 percent by 2021.

"Timing is not critical. Talking about it is important," Evans said. "Just going out there and trying to explain to everybody that symmetric means going above 2% is consistent with how we do things."

Fed's Evans: 'A couple' of rate cuts may help boost inflation
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
Michael Angelo
Michael Angelo Jul 12, 2019 1:39PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Cutting the rates will only increase the financial assets bubble. Won't move consumers to increase demand. But is like the tax cut, they will defend it till elections. Later will be other story. UNCERTAINTY x 27 is the Fed vision.
John Nichols
John Nichols Jul 12, 2019 1:39PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
amen Michael. False prosperity. the FED has done nothing for this world but move us from one crisis to another. It seems to me all they care about now is there own relevance. Since when is relevance a mandate?
Tom OKray
Tom OKray Jul 12, 2019 11:31AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Unless things change by the end of July their are currently 5 voting members who support or leaning toward a rate cut at the end of July, that leaves 7 against a rate cut.
Andrew carson
Andrew carson Jul 12, 2019 10:52AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Some would also say that the target of 2 percent is too low and should be raised to give the Fed more wiggle room in the future if another financial crisis presents itself.
John Nichols
John Nichols Jul 12, 2019 10:52AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
who cares what some would say. I only care about people who speak the truth.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email