Evans: The Fed Can’t Be 'Excessively Complacent’

The Federal Reserve can’t afford to be “excessively complacent” when the economy is sluggish, Federal Reserve Bank of Chicago president and chief executive officer Charles L. Evans said Monday.

“It is imperative to undertake action now,” Evans told a Ball State University luncheon, according to prepared text released by the Fed.

The correct policy action now, he suggested, “would be to communicate that we will keep the funds rate at exceptionally low levels as long as unemployment is somewhat above its natural rate.”

“The second part of the policy is to have an essential safeguard — that is, a commitment to pull back on accommodation if inflation rises above a particular threshold,” he said.

“Furthermore, I believe the inflation-safeguard threshold needs to be above our current 2% inflation objective — perhaps something like 3%,” Evans said.

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