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FIRST ON CNBC: CNBC EXCERPTS: FEDERAL RESERVE BANK OF CHICAGO PRESIDENT CHARLES EVANS AND FEDERAL RESERVE BANK OF ATLANTA PRESIDENT DENNIS LOCKHART SIT DOWN WITH CNBC’S STEVE LIESMAN TODAY ON CNBC

When: Today, Tuesday, May 1st at 10:30AM ET

Where: CNBC’s “Squawk on the Street

Following are excerpts from the unofficial transcript of a FIRST ON CNBC interview with Federal Reserve Bank of Chicago President Charles Evans and Federal Reserve Bank of Atlanta President Dennis Lockhart today, Tuesday, May 1st, at 10:30AM ET on CNBC’s “Squawk on the Street” (M-F, 9AM-12PM ET).

All references must be sourced to CNBC.

Video: Limits of Monetary Policy?

LOCKHART ON HIS OUTLOOK:

I HAVEN'T REALLY CHANGED MY OUTLOOK IN ANY FUNDAMENTAL WAY. THE NUMBER THAT WE GOT FOR GDP WAS REALLY VERY CLOSE TO WHAT WE EXPECTED GOING INTO THE QUARTER. TRACKING ESTIMATES KEPT RAISING THAT NUMBER, SO IT WAS A LITTLE DISAPPOINTING RELATIVE TO WHAT WE THOUGHT AT THE END OF THE QUARTER. AND, OF COURSE, LAST MONTH'S EMPLOYMENT NUMBER, JOBS NUMBER, ALSO WAS A DISAPPOINTMENT. BUT IT'S TOO EARLY IN MY MIND FOR ME TO CHANGE MY OUTLOOK.

EVANS ON HIS OUTLOOK:

I THINK THE TABLE IS STILL SET FOR 2.5, 3% GROWTH OVER THE NEXT 18 MONTHS. I THINK IT'S A LITTLE DISAPPOINTING AT THIS POINT IN THE RECOVERY, WE OUGHT TO BE DOING BETTER.

EVANS ON JOB GROWTH:

I THINK THE JOB GROWTH HAS BEEN PRETTY STRONG RECENTLY EXCEPT FOR THE LAST MONTH. THIS WEEK, WE'LL GET ANOTHER INDICATION ON THAT. I'M HOPEFUL THAT THE LABOR MARKT WILL WORK ITSELF OUT. BUT WE REALLY NEED SOME BIG NUMBERS, IM LOOKING FOR 150-200K. AND THAT'S NOT REALLY ENOUGH TO MAKE PROGRESS ON UNEMPLOYMENT THE WAY WE OUGHT TO BE MAKING PROGRESS

LOCKHART ON THINKING IN TERMS OF A SET OF CONDITIONS:

PULLING A NUMBER OUT OF THE AIR IS A BIT TOO SIMPLISTIC. I THINK MORE IN TERMS OF A SET OF CONDITIONS, YOU CAN MAYBE ATTACH SOME NUMBER TO THAT. A SET OF CONDITIONS RELATED TO INFLATION OR EMPLOYMENT AND FROM THAT, THEN I CAN DRAW SOME SENSE OF UNDER WHAT CONDITIONS I WOULD BE PREPARED TO SUPPORT MORE ACTION.

EVANS ACCOMODATION:

I STILL THINK THERE'S A TREMENDOUS AMOUNT OF ROOM FOR MORE ACCOMODATION TO HELP SUPPORT THE ECONOMY FROM THE MACRO ECONOMIC SIMULATION THAT I’VE SEEN, IT DOESN'T REALLY GENERATE VERY MUCH INFLATION IN THIS ENVIRONMENT. WE'VE GOT A LOT OF SLACK AND WELL ANCHORED EXPECTATIONS. AS THE ECONOMY STARTS ROARING ALONG, AGAIN, PRODUCTIVITY WILL GET HIGHER AND A LOT OF GOOD THINGS WILL HAPPEN

LOCKHART ON RISK APPETITE:

I THINK THERE'S ONLY SO MUCH WE CAN DO TO STIMULATE LOAN DEMAND AND TO CHANGE THE RISK APPETITE OF THE FINANCIAL SYSTEM OR BANKS. SO I'M NOT SURE AT THIS MOMENT THAT MORE STIMULUS WOULD – AT LEAST MORE REALLY ACTIVE STIMULUS IN THE FORM OF QUANTITATIVE EASING, FOR EXAMPLE, WOULD HAVE THAT BIG OF AN EFFECT AND I THINK THE LONGER TERM COSTS HAVE TO BE KEPT IN MIND COSTS RELATED TO INFLATION EXPECTATIONS FOR EXAMPLE.

EVANS ON BANK LENDING:

I THINK THEY'RE IN A BETTER PLACE THAN THEY WERE BEFORE. BUT I'VE CERTAINLY HEARD THE SAME COMMENTARY. THERE'S NOT AS MUCH A DEMAND, PEOPLE HAVE PAID DOWN THEIR BALANCE SHEETS. COMPANIES ARE IN A BETTER POSITION. I THINK THAT THE CIRCUMSTANCES COULD CHANGE, THOUGH, UNDER THE RIGHT CIRCUMSTANCES. THERE COULD BE A LOT OF LENDING AND THE ECONOMY WOULD START PICKING UP A LOT SO I THINK ADDING TO THAT WOULD BE HELPFUL.

LOCKHART ON SAVERS:

WE CAN ONLY HAVE ONE POLICY. THAT POLICY IS DESIGNED TO SUPPORT THE RECOVERY. SO UNFORTUNATELY, THERE'S WINNERS AND LOSERS IN ALMOST ANY POLICY SITUATION. WE ARE GOING TO TALK ABOUT THIS LATER THIS MORNING WE ARE TALK ABOUT THE LIMITS OF MONETARY POLICY. MONETARY POLICY CAN'T TARGET OUTCOMES FOR SPECIFIC GROUPS.

LOCKHART ON THE BALANCE SHEET 1:

ADDITIONAL POLICY THAT WOULD INCREASE THE SIZE OF THE BALANCE SHEET IS SOMETHING TO BE HELD IN RESERVE FOR CIRCUMSTANCES THAT I THINK ARE A BIT DIFFERENT THAN WHAT WE SEE TODAY.

LOCKHART ON HEADWINDS:

THERE REALLY ARE TWO OR THREE AT THE MOMENT. FIRST I'D SAY SOMETHING BREAKING IN EUROPE THAT SPILLS OVER INTO THE U.S. ECONOMY. THE SECOND THAT IS THE SO CALLED FISCAL CLIFF AT THE END OF THE YEAR. THE THIRD IS VERY HARD TO PREDICT, IT WOULD BE A MIDDLE EAST CONFLICT THAT HAS THE EFFECT OF SPIKING OIL PRICES.

EVANS ON INFLATION EXPECTATIONS:

WELL I THINK YOU CAN BE UNHAPPY ON BOTH SIDES OF THIS. I THINK ON THE ONE HAND INFLATION HAS BEEN HIGHER AND CLOSER THAN I WAS FORECASTING ON THE HAND A LOT OF PEOPLE WERE SAYING THAT INFLATION WAS GOING TO TAKE OFF ON US. IN FACT, HEADLINE INFLATION DID TAKE OFF WHEN COMMODITY PRICES WERE HIGHER. YOU WOULD HAVE EXPECTED IF INFLATION WAS A BIG PROBLEM IT WOULD STAY UP AT THAT LEVEL AND NOT COME DOWN THE WAY THAT THEY DID. SO ANCHORED INFLATION EXPECTATIONS ARE REALLY PLAYING A BIG ROLE IN THIS

LOCKHART ON BALANCE SHEET 2:

IN THEORY, WE CAN CONTINUE TO GROW THE BALANCE SHEET. I THINK AS A PRACTICAL MATTER, THERE'S GOING TO BE A LIMIT. SOONER OR LATER, WE'RE GOING TO HAVE TO NORMALIZE THE BALANCE SHEET. AND GETTING OUT OF THAT SITUATION WITHOUT GETTING CAUGHT IN THE SITUATION WHERE THE EXPECTATIONS OF INFLATION SKYROCKET OR THERE'S JUST TOO MUCH MONEY IN CIRCULATION, THAT'S A PRACTICAL LIMIT BUT IN THEORY YOU CAN GROW THE BALANCE SHEET.

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