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Fed's Evans says need slow removal of policy accommodation

  • Chicago Fed President Charles Evans said inflation below the Fed's 2 percent goal is a "serious policy outcome miss," supporting gradual interest-rate hikes.
  • Evans acknowledged support for a reduction in the Fed's $4.5 trillion balance sheet
  • Evans warned the Fed must show its commitment to hitting its inflation target "sooner rather than later."

Charles Evans, president and CEO of the Federal Reserve Bank of Chicago.
David Orrell | CNBC
Charles Evans, president and CEO of the Federal Reserve Bank of Chicago.

Chicago Federal Reserve Bank President Charles Evans reiterated his view that inflation that is persistently below the Fed's 2 percent goal is a "serious policy outcome miss" and renewed his support for very gradual interest-rate hikes.

In the outline of a speech prepared for delivery to the Rocky Mountain Economic Summit that weather prevented him from attending, Evans repeated much of his recent comments acknowledging the strength of the real economy and supporting a reduction in the Fed's $4.5 trillion balance sheet. But he also warned that the Fed must show its commitment to hitting its inflation target "sooner rather than later."

"It remains to be seen whether there will be two rate hikes this year or three or even four - and exactly when we will start paring back reinvestments of maturing assets," Evans said in the remarks, published Friday. "Regardless, the important feature is that the current environment supports very gradual rate hikes and slow predetermined reductions in our balance sheet."