MNI BRIEF: Evans Sees Substantial Progress Later This Year

Chicago Fed President Charles Evans said Thursday the U.S. economy could make substantial further progress later this year -- a threshold for potential tapering of asset purchases -- and he said interest rates could rise in early 2024 or a little sooner if inflation runs hot. Evans told the Rocky Mountain Economic Summit hosted by the Global Interdependence Center he thought unemployment "should be about 4.5% by the end of this year."

Persistently low neutral interest rates make it more difficult to meet the Fed's inflation goals and Evans doubts inflation in say 2023 will be as strong as it is today. Evans is more worried about markets seeing a "head fake" on meeting its new policy framework than short-term views of what month tapering starts. Ex-Fed officials and staffers tell MNI they are concerned higher inflation expectations might become entrenched as the Fed promises to look through strong readings.