In a speech, Chicago Fed President Charles Evans said if Fed tries to “fine-tune a very modest inflation overshoot of only a tenth or two, we run a very large risk of failing to achieve our 2 percent averaging goal within any reasonable amount of time”.
For him, “getting inflation moving up with momentum and delivering rates around 2-1/2 percent is important for achieving on our inflation objective in as timely a manner as possible.”
Bottom line is, it will “take a long time” for average inflation to reach 2%. “To meet our objectives and manage risks, the Fed’s policy stance will have to be accommodative for quite a while. Economic agents should be prepared for a period of very low interest rates and an expansion of our balance sheet as we work to achieve both our dual mandate objectives.”
