CHICAGO — Federal Reserve Bank of Chicago president Charles Evans said Monday evening that additional purchases of mortgage-backed securities “might be worth the Fed’s consideration.”
Evans also told reporters that the Fed needs to be clearer in its forward guidance, stating it is the central bank’s “first line of order.”
Evans added that safe-haven flows have lowered U.S. rates, but could shift depending on market conditions. Therefore, it is important that the Fed officials make it clear they intend to keep long-term rates low and accommodation in place.
In a speech to the Loop Capital Markets Fourth Annual Economic Update dinner before a press briefing, Evans said that improvement in the U.S. unemployment rate remains very slow and the housing market remains a challenge despite very low interest rates.
In addition, he noted that U.S. consumers are not the same engines of growth that they were in the 1990s. As a result, the Fed should continue to clarify its future intentions, Evans said.
He added that until the unemployment rate slips below 7%, the Fed should keep the federal funds rate near zero. Evans also reiterated that the Fed would keep rates low until 2014 at least.