Charles L. Evans, the chief executive officer of the Federal Reserve Bank of Chicago, is crossing the wires on Monday and he has repeated his view that the current surge in inflation is largely “temporary” and will fade as supply-side pressures get resolved, but he also sounded less convinced by that story than before.
“I had expected to see more progress by now,” Evans said in remarks prepared for delivery to the Original Equipment Suppliers Association, adding that there are signs that inflationary pressures may be building more broadly, including increases in rents.
“These developments deserve careful monitoring and present a greater upside risk to my inflation outlook than I had thought last summer.”
Key comments from Fed’s Evans
Still have a ways to go until inclusive full employment.
Big question is how much of a mark current price pressures will leave on underlying inflation.
Economy still very much tied to virus, path forward is highly uncertain.
With case counts down, there’s room for optimism.
By unemployment rate alone, full employment would be well within sight, but doesn’t tell the whole story.
Stronger labor market conditions will draw some early retirees back to work.
Much of the current surge in inflation is temporary.
Highly uncertain how long it will take for supply and demand conditions to normalize and bring inflation lower.
Sees greater upside risk to inflation outlook than had seen last summer.
Uncertainties on outlook could lead fed to move up or delay rate increases.
Evans comments are in line with the Fed‘s main message last week when the central bank continued to lean on the transitory mantra. This has weighed on the greenback in recent sessions.