Chicago Federal Reserve President Charles Evans told CNBC on Friday he’s still nervous about continued low inflation and would prefer to “wait a little longer” than the March meeting before raising interest rates for the first time in 2018.
The financial markets, however, view a March rate increase as a virtual lock. Central bankers have projected three rate increases for 2018 after three hikes last year. Some economists even see four rate hikes this year as a possibility.
Evans, who is not a policy voting member this year but takes part in the meetings, said in a “Squawk Box” interview, “My own preference would be to wait a little bit longer, let the March anomalous inflation rate from a year ago fall out.” He added, “Let’s make sure these sort of Amazon, disruptive kind of pricing models aren’t continuing to find their way into keeping inflation lower than that.”
By midyear, if inflation does show signs of increasing to the Fed’s 2-percent target, Evans said he would be “much more confident” to continue “a gradual upward adjustment of the funds rate.” The fed funds rate — what banks charge each other for overnight loans — stands in a 1.25 to 1.50 percent range after the last Fed increase in December 2017.
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