Federal Reserve Bank of Chicago President Charles Evans on Tuesday clarified his views that briefly reiterated his support for loose monetary policy. He has issued a statement that slightly relieved the market. The recent rise in U.S. inflation is unlikely to lead to an undesirable type of inflation
Evans said, based on past data, he doesn’t see anything convincing that could change his support for a loose policy.
Former Treasury Secretary Larry Summers says that the Fed’s promise is to keep rates at near zero until the economy reaches full employment levels, inflation has reached 2% and the rates are on track.
He as an individual critic is of the view that considering government spending worth trillions of dollars to deal with the Covid-19 epidemic, on the one hand it can stimulate the economy but on the other hand it can cause a kind of inflation not seen in decades.
However, the opinion was refuted by Evan. He opined that based on past data the low inflation rate for almost 2 decades had lowered inflation expectations.
A large number of other Fed policymakers agree that the rise in inflation, which measured 4.2% in April, tends to be temporary in nature.
