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Chicago Fed's Evans: I have 'two rate increases penciled in' for 2017

Chicago Federal Reserve President Charles Evans told CNBC on Friday that he expects just two interest rate hikes this year.

"I've got an outlook and I'm a little cautious. (I) probably only have two rate increases penciled in for (2017). But if the outlook solidifies, if we actually get that, if risk management concerns are less important as we move away from zero lower down risk, yeah, three rate hikes could make sense," Evans said on CNBC's "Closing Bell."

Evans, speaking at the American Economic Association conference on Friday, earlier told reporters he believed two hikes was not an unreasonable expectation, depending on how economic data shapes up for the year.

In December, the Federal Reserve approved the first interest rate hike in a year, in part on the anticipation of aggressive fiscal policy ahead from the new presidential administration. The committee said it expects three rate hikes in 2017, two or three in 2018, and then three in 2019.

Evans said he's looking for inflation to increase more noticeably this year and expects it will come a little bit later, given the lags in monetary policy and other factors. Overall, he said the stock market is improving as people anticipate fiscal policy under President-elect Donald Trump.