Central banks can't fight rise in asset prices explicitly: Fed's Evans

Wednesday, 15 Nov, 2017

Mr. Evans, who has been supportive of rate rises this year even as he has signaled his anxiety over inflation that has stayed well short of the Fed's 2% price target, didn't offer a view on the near-term outlook for interest-rate policy.

Chicago Federal Reserve Bank President Charles Evans on Wednesday said he is anxious about a drop in United States inflation expectations and called for the USA central bank to respond by flagging the likelihood of higher inflation ahead.

"You go into December and you all have a discussion and you make a decision", Evans said on next month's meeting.

"Inflation data during 2017 have surprised to the downside and call into question the idea that USA inflation is reliably returning toward target", Bullard said in prepared remarks during an appearance in Louisville, Kentucky.

"I am concerned that persistent factors are holding down inflation, rather than idiosyncratic transitory ones", Evans said, citing declines in various measures of inflation expectations in recent years. "That's a political question". That has helped shift the focus toward financial stability as a possible justification for continuing to raise interest rates.

"I worry that monetary policy is called upon to address financial issues and in the current environment that would be a more restrictive policy", added Evans, during a panel session at a banking conference. "But there are better tools than monetary policy for promoting it".

"With healthy labor markets and much improved household and business balance sheets, the fundamentals for continued solid growth in 2018 look pretty good", he said.