Fed’s Evans Worried About Going Too Far, Too Fast With Rate Raises

Charles Evans, president of the Federal Reserve Bank of Chicago, speaks during the annual meeting of the National Association for Business Economics (NABE) in Arlington, Virginia, U.S., on Monday, September 27, 2021 .

Al Drago | Bloomberg | beautiful pictures

Chicago Federal Reserve President Charles Evans said he was worried about the US central bank raising interest rates too quickly in its quest to tackle the issue. runaway inflation.

Speaking to CNBC’s “Squawk Box Europe” on Tuesday, Evans said he remains “cautiously optimistic” that the US economy can avoid a recession – as long as there are no additional external shocks. .

His comments came shortly after a flurry of top Fed officials said it will continue to prioritize the fight against inflationis currently running near its highest level since the early 1980s.

Central bank benchmark interest rate hike by three quarters of a percentage point earlier this month, the third consecutive three-quarters increase.

Fed officials also said they would continue to raise rates above the current range of 3% to 3.25%.

When asked about investor concerns that the Fed doesn’t seem to have waited long enough to fully appreciate the impact of a rate hike, Evans replied, “Well, I’m a bit worried about that to be exact.”

“There was a delay in monetary policy and we moved quickly. We did three 75 basis points in a row and had a lot more talk to get to 4.25%. to that 4.5% by the end of the year, Evans said.

‘Highest Fund Rate’

Traders were concerned that the Fed remained more hawkish for longer than some had anticipated.

Fed’s Evans, 64, has consistently been one of the Fed’s policies in favor of lower interest rates and more accommodation. He will retire early next year.

“Again, I still believe our consensus, the median projections, is to reach peak fund rates in March – assuming no further adverse shocks. And if everything Things get better, we can do less, but I think we Evans said.

“You know, that offers a path to work, you know, settling into something that’s still not a recession, but there can be shocks, there can be other difficulties, ” he continued.

“Kindness knew that every time I thought the supply chain would improve, that we would increase auto production and lower the price of used cars and houses and all that happened. Because So, I’m cautiously optimistic.”

– Jeff Cox of CNBC contributed to this report.

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