The Fed should return to role as a ‘supporting actor’

The Federal Open Market Committee, of which Evans is a nonvoting member this year, has been hiking rates gradually since December 2015 and reducing the size of its balance sheet by allowing proceeds from the bond holdings to run off each month.

At last week’s meeting, the FOMC voted to hike rates another quarter point and to remove the word “accommodative” to describe its policy stance.

“We are now happily returning to our supporting actor role,” Evans said.

“The U.S. economy is firing on all cylinders: Growth is strong, unemployment is low, and inflation is approaching our 2 percent symmetric target on a sustained basis,” he said in describing current conditions. “Like my colleagues on the FOMC, I expect this good performance to continue over the next few years.”

Looking ahead, Evans said future crises likely would require responses that looked a lot like the last time: policy rates taken to zero and aggressive asset purchases such as occurred with quantitative easing. He also said the Fed should examine whether allowing inflation to run considerably above its 2 percent goal would be an option.

WATCH: Powell says US economic outlook may be ‘too good to be true.’

Be the first to comment

Leave a Reply

Your email address will not be published.


*