Chicago Federal Reserve Chairman Charles Evans said he fears the U.S. central bank is raising interest rates too quickly in its quest to combat runaway inflation.
Speaking to CNBC’s “Squawk Box Europe” on Tuesday, Evans said he remains “cautiously optimistic” that the US economy can avoid a recession – provided there is no other external shocks.
His comments come shortly after a slew of senior Fed officials said they would continue to prioritize tackling inflation, which is currently near its all-time highs. of the 1980s.
The central bank raised benchmark interest rates by three-quarters of a percentage point earlier last week, the third straight increase of this magnitude.
Fed officials have also indicated that they will continue to raise rates well above the current range of 3% to 3.25%.
Asked about investor concerns that the Fed doesn’t seem to be waiting long enough to properly assess the impact of its interest rate hikes, Evans replied, “Well, I’m a little nervous about that exactly.”
“There are delays in monetary policy and we have acted quickly. We have made three consecutive increases of 75 basis points and there is talk of more to reach this 4.25% to 4.5% by the end of the year. end of the year, you’re not leaving a lot of time to watch each monthly release,” Evans said.
“Maximum rate of funds”
Traders fear the Fed will remain more hawkish for longer than some expected.
Evans, 64, of the Fed, has always been a proponent of Fed policy for lower rates and more accommodation. He will leave his post at the beginning of next year.
“Again, I still believe that our consensus, median forecast, is to hit the peak funds rate by March – assuming there are no more negative shocks. improve, maybe we could do less, but I think we’re headed toward that maximum funding rate,” Evans said.
“It provides a pathway for employment, you know, stabilizing at something that’s still not a recession, but there could be shocks, there could be other headwinds,” he said. he declares.
“God knows, every time I thought supply chains were going to get better, that we were going to increase car production and bring down the prices of used cars, housing and all that, something happened. is produced. So cautiously optimistic.”
— CNBC’s Jeff Cox contributed to this report.
