Monday, December 05, 2011

Evans urges Fed action

Chicago Fed President Charles Evans came out today in favor of more explicit guidance on how the Fed likely will react to changes in certain measures of unemployment and inflation. He calls for a zero fed funds target rate until the unemployment rate falls below the natural rate unless inflation is running over 3 percent. Evans states that the U.S. is in a liquidity trap, suggesting that it is OK to let inflation run above target in the near term. The Chicago Fed president sees core inflation remaining moderate, nonetheless, due to high unemployment and resource slack.

No comments: