The economy will continue to grow over the next few years, though unemployment will remain high and inflation tame, so there's "no urgent need" for the Federal Reverse to change its low-interest rate policy, Chicago Federal Reserve President Charles Evans told CNBC.
"I think 2010 will definitely be a better year than this year and the year before that," Evans said in a live interview. "We're looking for growth to be on the order of 3 to 3 1/2 percent over the next 18 months."
"The unfortunate aspect of this," he added "is that the unemployment rate will continue to be quite high. It's 10 percent now. It's likely to go up a few tenths before it starts coming down in the spring—maybe the summer—of next year. I think the unemployment rate will be lower by the end of the year, maybe in the mid-nines."
Evans suggested that the Fed's "accommodative policy" of low interest rates and monetary support for the credit markets could continue for some time.
"With the unemployment rate declining in 2011 to 7 or 8 percent, there's still going to be a lot of accommodation that will be required even if we're recalibrating policy so that rates are rising at that time."
Evans said the Fed might start considering pushing rates higher "in three to four meetings"—or this spring.
"I don't see an urgent need to recalibrate," he said. "We're currently looking at our exit strategy and all the policies that can be applied when we need to adjust our balance sheet. And we'll do that in a timely fashion."
Evans acknowledged that there's "an active debate" at the Fed about how the central bank will start tightening the reins, including pulling back on its massive financial support for credit markets before it starts raising interest rates.
"There are a number of tools that we can apply," he said. "Even with a very large balance sheet, we could begin to apply more restrictive credit policies."
Inflation meanwhile, will remain moderate, giving the Fed time before it needs to raise rates.
"Core inflation has been 1 1/2 percent and I'm expecting that to continue a couple of years," Evans said.
"I think the focus is going to be on how the economy is playing out, how unemployment is coming down and whether or not inflationary pressures remain as muted as they currently are," he added.
Earlier Monday, the Chicago Fed said its gauge of the national economy rose but still remained stuck in negative territory in November, suggesting a resumption of below-average U.S. growth.
The Chicago Fed said its National Activity index increased to minus 0.32 in November from a revised minus 1.02 in October. The October figure was originally reported at minus 1.08.