Fed officials have been worried that inflation is running well below 2 percent. But there are signs it is starting to tick up. Prices rose 0.2 percent in April, pushing the year-on-year reading up to 1.6 percent—the largest gain since November 2012.
Evans said the Fed's 2 percent inflation target should not be seen as a ceiling and could be higher.
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He forecast U.S. economic growth of around 3 percent per quarter for the rest of this year—possibly a little higher in the current quarter—and said the inventory adjustments that hit first quarter growth would not be a negative factor.
The Fed was expected to complete the tapering of its stimulus plan by the end of this year, he said.
Fed policymakers began in April to lay groundwork for an eventual retreat from their extraordinarily easy monetary policy with a discussion of the tools they could employ to accomplish the task, but no final decisions were taken, according to minutes of the session released last month.
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"The expectation is that tapering will be completed by the end of this year," Evans told the conference.
Labor force participation had declined more than expected and an uptick in the U.S. unemployment rate would not be a surprise, he said, but added that this was already incorporated in the central bank's outlook.