It is time for the Federal Reserve to shift to smaller interest rate hikes to avoid tightening monetary policy more than needed, and slow the pace further once risks become more 'two-sided,' Chicago Fed President Charles Evans said on Friday.
Chicago Federal Reserve Bank President Charles Evans looks on during the Global Interdependence Center Members Delegation Event in Mexico City, Mexico, February 27, 2020. REUTERS/Edgard Garrido
"Stepping down to a pace that's not 75 , giving the Committee a little bit of runway to see more data before you get too far ahead of where you eventually want to be, makes sense to me."its fourth straight 75-basis-point interest rate increase, bringing the policy rate to 3.75%-4.00%, as part of an effort to "expeditiously" get borrowing costs high enough that they begin to slow growth and bite into inflation.
"There's ample capacity" to tighten monetary policy even at a slower pace, he said. "We have accomplished front-loading and now we are at the point where we are looking for the right level of restrictiveness and mindful of data dependency in a world where inflation just lags more than the real economy."
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