Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Fed's Evans: Wants 'few more' job reports before bond taper

EconomyAug 10, 2021 05:11PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. Chicago Federal Reserve Bank President Charles Evans speaks during the Global Interdependence Center Members Delegation Event in Mexico City, Mexico, February 27, 2020. REUTERS/Edgard Garrido

By Howard Schneider

(Reuters) - The current inflation spike shouldn't push the Federal Reserve to tighten monetary policy prematurely, with more months of labor data needed before any changes as well as more certainty that the pace of price increases will remain above the Fed's 2% target, Chicago Fed president Charles Evans said on Tuesday.

"We are making progress ... We are well on our way," to the point where it would be appropriate for the Fed to begin trimming its $120 billion in monthly bond purchases and eventually raising interest rates, Evans said in an online meeting with reporters.

The benchmark for that bond "taper" is likely to be met "later this year" based on expected strong continued job growth, Evans said.

But unlike some of his colleagues who argue the Fed should start slowing bond purchases soon, Evans remained among those who feel most strongly that the current surge in prices is temporary, and that the Fed should be aggressive in seeing through its promise of reaching maximum employment.

The debate over when to reset monetary policy for the post-pandemic era has divided Fed officials, and the remaining three policy meetings this year are likely to see that intensify.

A number of policymakers are concerned the current high rate of inflation risks becoming more embedded, and others like Evans feel it will ebb on its own as the economy works through a complex reopening.

Where some are concerned the Fed may be adding to unsustainable asset values with its monthly bond purchases, others feel the recovery is not yet fully complete, and needs the full suite of central bank support a while longer.

Evans said he wanted to see "a few more" monthly employment jobs reports before feeling enough progress had been made to start curtailing the emergency programs put in place to get the economy through the pandemic.

"Everybody is wondering about September, November, December, January," as possible dates to start trimming the bond purchases, Evans said. "I don't think that one meeting on either side is going to have an important effect."

What's more important, he said, is for the Fed to follow through on the new framework it adopted last year, and prove it is serious about reaching maximum employment and achieving an inflation rate that averages 2% over time - making up for years of inflation that was considered too low.

That will mean some years when inflation is above 2%, and 2021 will count as one.

Inflation measures watched by the Fed are currently running around 3.5% annually, a pace that "really challenges households and businesses. There is no sugar-coating the pain," Evans said.

But he is also skeptical that will last. While some of his colleagues expect inflation to remain at or above 3% next year, Evans said he projects it will revert to close to 2% - an argument for keeping monetary policy and credit conditions loose.

The Fed has staked its credibility anew on pushing employment higher, and taking risks with allowing higher inflation in the process.

After committing to that goal, "we should not preemptively end a strong improvement in the labor market because somebody is getting nervous about inflation," Evans said. "I am going to be very regretful if we sort of claim victory on averaging 2% and then find ourselves in 2023 with about a 1.8% inflation rate ... That would be a challenge for our long run framework."

Going forward "employment is going to be good," Evans said. "Inflation continues to be something that is going to have to behave differently over the next couple of years than it has over the last 10" to warrant rate increases as soon as next year, as some of his colleagues are projecting.

Fed's Evans: Wants 'few more' job reports before bond taper

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’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
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 (1)
Felipe Daniel
Felipe Daniel Aug 10, 2021 6:31PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
How much more Dovish can you get? Not all get the message.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
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'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
Sign up with Email