Chicago Federal Reserve President Charles Evans explained that the US central bank will likely need to keep monetary policy easy for some time after 2023 in order to meet its inflation goal, even once it begins raising interest rates.
Evans repeated has repeated the view that the economy, while improving, remains weak.
His forecast for the economy to end the year about 3.5% smaller than it was last year, and to grow at about a 4% pace next year, depends on getting further fiscal stimulus.
"We are not going to follow a strict numerical formula to determine the time of liftoff and how long to keep policy accommodative after liftoff," he said.
Evans expects that inflation will return to 2% only by 2023, and the Fed will need to moderately overshoot that level for some time thereafter to achieve its goal of 2% on average.
"Our work on inflation is unlikely to be complete when we first begin to raise rates, and so it also indicates that we will maintain accommodative monetary conditions until our inflation averaging goal is met," he added.
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