Fed's Evans: Necessary to maintain accommodative policy for years

Eren Sengezer FXStreet

It will be necessary for the US Federal Reserve to maintain its accommodative monetary policy for years amid low inflation, Chicago Federal Reserve Bank President Charles Evans said on Tuesday, as reported by Reuters.

Additional takeaways

"US has been able to return to about 90% of pre-crisis economy."

"Disadvantaged sectors that are struggling include in-person services, travel, leisure."

"US unemployment rate to fall to maybe 7% by end of year."

Unemployment to fall to 5.5% by end of next year, assuming further fiscal support and a vaccine."

"Inflation will continue to be challenged, will underrun 2% for a number of years."

"Every week and month without renewing fiscal support risks a longer period of slow-growth if not outright recessionary dynamics."

"Outlook is premised on at least $500 billion, perhaps $1 trillion of additional fiscal support."

"A bigger overshoot on 2% inflation means you would get to an average 2% inflation more quickly."

"Will need to have more Fed Committee discussion about asset purchases."

Market reaction

The US Dollar Index largely ignored these comments and was last seen gaining 0.26% on the day at 93.79.

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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