Fed's Evans: Low Inflation Should Mean No Rate Hike Until Next Year
Washington (Mar 25) At least one Federal Reserve policy maker sees no need to raise interest rates at a time when inflation is so low.
"I see no compelling reason for us to be in a hurry to tighten financial conditions until then," Chicago Fed President Charles Evans said to the Official Monetary and Financial Institutions Forum in London.
"Economic conditions are likely to evolve in a way such that it will be appropriate to hold off on raising short-term rates until 2016."
He worries that the rapid rise of the U.S. will continue hamper inflation, which Evans fears will not rise to the Fed's target level of 2% until 2018.
"Since last summer, the dollar has appreciated nearly 23% against major currencies," he said. "The stronger dollar presents a clear disinflationary pressure through its influence on U.S. import prices."
Evans is among the more dovish members of the Fed. Some of his colleagues have been making remarks indicating they favor a mid-year rate hike.
Also in London this week, St. Louis Federal Reserve President James Bullard said that "Zero is no longer the appropriate interest rate for the U.S. economy."
Last week, the Fed's official policy statement removed a reference to being "patient" before tightening.