Chicago Federal Reserve President Charles Evans said government stimulus policies could boost growth and reduce the need for monetary accommodation, underscoring some investor expectations that President-elect Donald Trump's policies will lead to higher interest rates.
A government stimulus "might increase growth by a couple of tenths over the next two years," Evans told reporters Thursday after speaking at an event in Naples, Fla. "We look forward to refining that when we actually see proposals that are moving forward and likely to be implemented," he said about gross domestic product forecasts, adding that estimates could go even higher depending on what policies are implemented.
If the economic outlook improves, "we would need less accommodation or, put it a different way, the current low setting of the funds rate would all of a sudden become that much more accommodative," said Evans.
Evans, a voting member of the policy-setting Federal Open Market Committee this year, has advocated for two interest-rate increases in 2017, though three quarter-point moves is "not implausible," he said Jan. 6.
