MNI BRIEF: Fed Evans- Inflation Surprise to Moderate Next Year

Chicago Federal Reserve President Charles Evans said Thursday that while he's been surprised by the inflation run-up this year and especially for used cars, things should fade out next year.

Core PCE inflation will be about 3% around year-end and 2.1% next year, Evans said at the Rocky Mountain Economic Summit hosted by the Global Interdependence Center. "A lot of the re-opening heat is going to subside," he said. He also said the Fed shouldn't raise rates "unnecessarily" unless it's clear that inflation goals aren't being met.

Economic growth will be 7% this year and a still fairly solid 3% next year, he said, and a "quite strong" job market will reduce unemployment to 4.5% this year and below 4% next year. Ex-Fed officials and staffers tell MNI they are increasingly concerned about the latter scenario where higher inflation expectations might become entrenched as the Fed promises to look through strong readings.