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CNBC Exclusive: CNBC Excerpts: Federal Reserve Bank of Chicago President Charles Evans Speaks with CNBC's Steve Liesman on "Squawk Box" Today

WHEN: Today, Thursday, May 7th

WHERE: CNBC's "Squawk Box"

Following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with CNBC Senior Economics Reporter Steve Liesman and Federal Reserve Bank of Chicago President Charles Evans on CNBC's "Squawk Box" (M-F, 6AM-9AM ET) today. Following are links to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000377430 and http://video.cnbc.com/gallery/?video=3000377544.

All references must be sourced to CNBC.

EVANS ON BOUNCE BACK

I think we are expecting a bounce back. First quarter was weak, up only two-tenths, but we kind of think that was transitory in part because the dollar has been high, inventory accumulation was high, consumer was a little weaker, but we think that things are going to improve. So looking forward to a better second quarter number that would be more consistent with a stronger growth outlook that I and so many other people have, like 2.5 to 3% this year.

EVANS ON RATES

I think optimum monetary policy would push it into 2016. I think that would be consistent with having more confidence and inflation is going to actually pick up, go to 2% relatively soon over the next one to two years. And I think there are uncertainty reasons, too, to sort of make you say why should we be in a rush to do this? You know, a combination which is helping the economy move up and if inflation were going to pick up more strongly than I am expecting, we know how to deal with that. We can increase rates.

EVANS ON IMPROVING THINGS

Because the fundamentals – we're still increasing the fundamentals – we've been more exposed to negative events that have appeared to happen and cause the first half to be weaker for a number of years. Now, every year we are getting better and I think we are more resilient, so that is why I am looking for the second quarter, second half to be better and that should improve things.

EVANS ON ECB

I think they still have a ways to go in Europe so I can't begin to guess how the yields will work their way out. They could retrace, but I am confident the ECB is going to continue with their chosen path for quite some time and that should reinforce the good accommodation.

EVANS ON BEING OPTIMISTIC

We are going into each meeting from now on talking about what the policy rate should be and at the end of every meeting it's possible that we will decide to begin the renormalization process. Now, I am looking for 200 hundred-plus payroll employment over the next many months, growth above trend and that should be supportive of that. So I am optimistic. I've got 2.5 to 3% outlook for real GDP so I think that's good.

EVANS ON YELLEN COMMENTS

It's incumbent upon us to talk about financial stability, financial instability risk that we might be facing and so in that context, it's quite natural that policy makers and the chair of the Federal reserve is going to make some comments about leverage, how that's working its way through the economy. She said that financial stability risks are moderate on the basis of everything that we have looked and I think that's the larger takeaway so I think everybody ought to get used to us talking about financial stability issues.

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