Fed's Evans Says Interest Rate Levels 'Accommodative'

Chicago Federal Reserve Bank President Charles Evans said on Wednesday that U.S. interest rates are now "accommodative" and should help to support stronger growth in the second half of 2008.

"The policy actions taken in March, in combination with earlier moves, should help to promote moderate growth over time and moderate the risks to economic activity," Evans said in comments prepared for a speech to the New York Association for Business Economics.

"The effects of last fall's rate cuts are probably just beginning to be felt, and the cumulative declines should do more to promote growth going forward," he said.

Evans said the Fed must be aware of the risk that disruptions in financial markets, against the backdrop of weak growth, could "reinforce the weakness in the economy."

Although recent concerns have been focused on growth, Evans said the Fed must be "mindful of inflationary pressures."

He termed recent news on inflation "disappointing", saying core inflation is running at "a higher rate than I would like to see in the long run".

Evans is not a voting member of the policy-setting Federal Open Market Committee in 2008. A copy of his remarks was made available in advance.