In a fascinating WSJ interview, Charles Evans, president of the Federal Reserve of Chicago, provided further support for a massive, unprecedented resumption of quantitative easing by the U.S. Federal Reserve.
"In the last several months I've stared at our unemployment forecast and come to the conclusion that it's just not coming down nearly as quickly as it should...This is a far grimmer forecast than we ought to have.....As result, he said, he favors "much more [monetary] accommodation than we've put in place."
He goes on to suggest that the Fed should push rates down to get inflation higher and to tolerate inflation above it's target of 2% for some time to make up for lost ground.
"That is a potentially useful policy tool at this point and I definitely think we should study it more," Mr. Evans said in the article.
When questioned about commodity prices and gold, he had this response:
"I don’t put a lot of weight on those indicators. Gold moves up and moves down. Commodity prices are often driven by stronger demand around the world and with emerging markets doing better at this point in the cycle that is part of it. Does it worry me about inflationary expectations? I just don’t see that at the moment. When I talk to people in the business community there is not a lot of pricing power."