Disinflation a Concern; Upturn By Year-End: Evans

Chicago Federal Reserve Bank president Charles Evans yesterday said inflation developments are under control and disinflation is a concern.

“There is going to be considerable resource slack, which will limit price pressure,” Evans told reporters on the sidelines of a banking conference.

Turning to the U.S. economy, he said he expected that “before the year is out, we will see positive growth rates for” gross domestic product.

Yet Evans said that this growth would not yet “feel especially good” because the unemployment rates would likely continue to go up. He predicted that unemployment would not likely improve before the start of 2010.

Evans even suggested that the Fed’s forecasts that U.S. unemployment would peak at the rate of 8.5% to 9.0% might need to be revised to the upside. “I am a little concerned that the more recent employment data have been a little bit negative to our forecast,” he said. “There is a risk that unemployment could be higher than that.”

— Market News International

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