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"It
will be critical for monetary policymakers to look through
temporary price increases and not even think about thinking
about adjusting policy until the economic criteria we have laid
out have been realized," Evans said in remarks prepared for
delivery to the Oakland University School of Business
Administration, in Rochester, Michigan. "So I see us staying the
course for a while."
The Fed cut interest rates last March to near zero and has
pledged to keep them there until the economy reaches full
employment and inflation hits and is on track to exceed 2%. The
central bank has also said it will continue to buy $120 billion
of bonds each month until it sees substantial further progress
toward its employment and inflation goals.
Evans said he is optimistic that the ongoing boost from the Fed,
along with the $892 billion pandemic relief package passed in
December and the rollout of vaccinations, will power the economy
to grow 5% to 6% this year.
His forecast, he said, also pencils in about half the $1.9
trillion fiscal package that the Biden administration is pushing
for.
Unemployment, now at 6.7%, could be back down near its
pre-pandemic level of 3.5% by the end of 2023, Evans said.
But inflation, he said, is another story. Though fast economic
growth and temporary supply constraints are expected to boost
prices this spring, inflation will likely end this year at
around 1.5% or 1.75%, and may not get to the Fed's goal of
moderately exceeding 2% until the mid-2020s, he predicted.
"Monetary policy still has a good deal of work to do here," he
said.
(Reporting by Ann Saphir in Berkeley, Calif.; Editing by Matthew
Lewis)
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