WHEN: Tuesday, June 20th
WHERE: CNBC's "Squawk on the Street"
Following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with Chicago Fed President Charles Evans and CNBC's Steve Liesman on CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET) Tuesday, June 20th. Following are links to the video on CNBC.com: http://video.cnbc.com/gallery/?video=3000629106 and http://video.cnbc.com/gallery/?video=3000629102.
All references must be sourced to CNBC.
EVANS ON INFLATION
YOU ARE RIGHT I HAVE VOTED WITH THE COMMITTEE ON THE RATE INCREASES SO FAR AND THATS IN PART BECAUSE I THINK THAT THE FUNDAMENTALS FOR THE ECONOMY ARE GOOD I THINK THAT THE UNEMPLOYMENT RATE FALLING TO 4.3 IS GOOD. I THINK ITS LIKELY WE WILL SEE MORE INFLATIONARY PRESSURES BUT I'M NERVOUS. I THINK OUR CURRENT POLICY STANCE, EVEN THOUGH WE RAISED IT BY 100 BASIS POINTS FROM BEFORE, IS STILL ACCOMODATIVE. SO I THINK UP TO THIS POINT I THINK WE CAN STILL EXPECT INFLATION TO GO UP TO 2%.
EVANS ON CONTINUED ACCOMODATION
CONTINUED ACCOMMODATION, PERHAPS A SHALLOWER PATH OF INCREASES. AT THE MOMENT WEVE DONE TWO RATE INCREASE THIS YEAR. MEDIAN SEP IS FOR THREE WE CAN GO UNTIL DECEMBER AND MAKE A JUDGEMENT MAYBETHREE IS THE RIGHT NUMBER MAYBE TWO IS THE RIGHT NUMBER SO I THINK WE HAVE TIME TO LOOK AT THE DATA, TO SEE HOW THINGS IMPROVE.
EVANS ON THE LABOR FORCE
DEMOGRAPHIC FACTORS HAVE REDUCED LABOR FORCE PARTICIPATION RATES BY QUITE A LOT. OVER A LONG PERIOD OF TIME ITS A SECULAR CHANGE. HOW MUCH WE CAN EXPECT PEOPLE FROM COMING INTO THE WORKFORCE AND ADDING TO LABOR INPUT IS MUCH DIFFERENT THAN IT WAS IN THE 80s, WHEN WE HAD OVER 3% TREND GROWTH. ARGUABLY CERTAINLY WE HAD GOOD GROWTH OVER THAT TIME. A LOT OF PEOPLE COMING INTO THE LABOR FORCE. WE CANT COUNT ON THAT NOW PRODUCTIVITY GROWTH SEEMS TO BE STEPPING DOWN FROM THE WONDERFUL TEN-YEAR PERIOD WE HAD in 95-05 SO ITS BEEN STEPPING DOWN. YOU PUT ALL THAT TOGETHER AND I GET 1.75%. AND IM NOT THE MOST PESSIMISTIC PERSON.
EVANS ON GETTING TO 3 PERCENT
ITS NOT A QUESTION OF CAN WE. THE QUESTION IS HOW DO WE? SO SOMEHOW YOUVE GOT TO GET MORE PEOPLE COMING INTO THE LABOR FORCE SO ITS CONSISTENT WITH MUCH STRONGER LABOR INPUT THAN WHAT WEVE SEEN AND ALSO
PRODUCTIVITY IMPROVEMENT AND THATS A TOUGH NUT TO CRACK ACTUALLY IT DOESNT COME OVERNIGHT. IT REQUIRES INNOVATION AND IT REQUIRES PUTTING NEW TECHNOLOGIES IN PLACE.
EVANS ON TECHNOLOGY
EVANS: WE ARE SEEING INTERESTING AND IMPORTANT TECHNOLOGICAL CHANGES RIGHT NOW AND THEYRE INFLUENCING HOW WE BUY EVERYTHING, HOW WE GO ABOUT HANDLING CAPS
LIESMAN: BUT IT'S NOT IN THE DATA
EVANS: BUT ITS DISRUPTIVE, TOO. AND SO FOR EVERY, YOU KNOW, COMPANY THAT SEES THE VALUE OF THEIR CAPITAL GO UP, THERES ANOTHER COMPANY THATS BEEN DISRUPTED IN THE VALUE THAT THEIR CAPITAL GETS MARKED DOWN BECAUSE ITS NOT GOING TO COMPETE THE SAME WAY.
EVANS ON BUSINESS CONFIDENCE
BUSINESS CONFIDENCE HAS BEEN STRONG THAT IS CERTAINLY TRUE I THINK IT HAS BEEN AN EXPECTATION THAT WASHINGTON THE PRESIDENT AND CONGRESS WOULD DELIVER ON SOME TYPE OF TAX REFORM, RIGHT SIZING REGULATORY BURDEON, LESS REGULATORY BURDEON THINGS LIKE THAT. IT IS TAKING LONGER AND THERE'S MORE UNCERTAINTY. IT HASN'T REALLY BEEN LAID OUT IN A CLEAR FASHION SO YOU KNOW PEOPLE ARE PROBABLY DOWNGRADING HOW MUCH THEY EXPECT.
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