Fed's Evans: Inflation is too low and has been so for quite some time

Eren Sengezer FXStreet

In an essay published on the Federal Reserve Bank of Chicago's website, Charles Evans explained his rationale for his dissent at the December 2017 FOMC meeting.

I did not share the majority’s view that the balance of evidence favored a rate increase.

Real activity in the U.S. is on a solid footing, which by itself would support a further adjustment in policy.

Inflation, however, is too low and has been so for quite some time.

I am concerned that persistent factors are holding down inflation, rather than idiosyncratic transitory ones.

I am concerned that too many observers have the impression that our 2 percent objective is a ceiling that we do not wish inflation to breach.

I believe that leaving the target range at 1 to 1-1/4 percent at the current time would have better supported a general pickup in inflation expectations.

Many analysts think the drop in core inflation this past spring was probably transitory.

Waiting a while longer before raising rates would have given us a chance to see whether or not that was true.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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