Chicago Fed President and FOMC member Charles Evans said on Friday, shortly after the release of official US labour market data, that the jobs numbers have been quite good for some time and that the labour market is in a very good position, reported Reuters citing an interview on CNBC. There is a tremendous amount of uncertainty regarding Russia and Ukraine, Evans said.
The latest jobs report doesn’t really change anything that Fed Chair Jerome Powell is positioning for, Evans continued, a remark that might be interpreted as Evans encouraging markets not to start rebuilding expectations for a 50bps rate hike later in the month. Recall that Powell earlier in the week signalled a 25bps hike. With inflationary pressures, we need to be moving towards a more neutral monetary policy position, Evans added, saying that we need to be within striking distance of neutral if that’s necessary.
This is not the 1970s of how inflation got out of hand, he continued, though the Fed needs to be close enough to neutral by the end of the year so that we can deal adequately with inflation. The recent commodity price rise reinforces “unhelpful” tendencies in prices, Evans continued, adding that by the end of the year, we will have a better fix on how far we need to go on rates.
I don’t think we will see nearly as restrictive setting of monetary policy as we did in the 90s, the Chicago Fed President went on, remarking that doing 25bps of rate hikes at each meeting may be more than essential.