U.S. labor markets are strong and the consumer is really “picking up the pace,” though inflation remains too low and declining inflation expectations are a cause for concern, said Federal Reserve Bank of Chicago President Charles Evans.
Evans, one of the U.S. central bank’s most dovish officials who favors delaying rate hikes until inflation advances, said there had been progress on the Fed’s preferred measure of price pressures excluding volatile food an energy components.
“We’ve finally gotten core PCE inflation of 1.7 percent,” he told the Council on Foreign Relations in New York Tuesday. “We’re close, we’re getting there, and if I had even more confidence about getting to 2 percent I’d feel better about monetary policy re-normalization. We’ll see how that goes.”
Investors expect the Federal Open Market Committee to lift the target for its policy benchmark by a quarter percentage point when it meets next month. It said on Nov. 2 that “the case for an increase in the federal funds rate has continued to strengthen.”