Chicago Fed President to Support Stimulus Plans

By TraderVox.com

Tradervox (Dublin) – Charles Evans, the Chicago Federal Reserve Bank President said in an interview yesterday that he is supporting various measures that would spur job growth in the country. He said this to stress his commitment to support additional stimulus in the economy. Further, he indicated that he is in support of “any accommodative policy” that will spur growth and increase employment. He suggested that extending the Twist program, asset purchases, and mortgage-backed securities would be good for the nation’s economy. Evans is a non-voting member of the policy-setting Federal Open Market Committee which is due to meet next week to deliberate of the slowing job growth and the worsening debt crisis in Europe.

Evans called on the Fed to clarify its forward guidance advising the bank to commit to the current interest rate until unemployment rate reaches below 7 percent or inflation exceeds 3 percent. in their last meeting, the FOMC members resolved to keep the low interest rate until late 2014 as a way of reducing the high level of unemployment. The Fed is expected to give a revised growth, inflation and joblessness outlook on June 20. Evans projected that the growth in the next two years might reach 2.5 percent which he said it is much weaker than he would have liked.

In his interview, Charles Evans indicated that the numerous economic shocks from the euro area are providing difficulties, but said that he has no doubt the unemployment will reach below 7 percent. He said that the question is about when this will be achieved hence the need for the Fed to take a more accommodative monetary policy.

In a report, on June 1, the labor department showed that the US employers added the least jobs in a year in May. This has raised concerns that the US recovery is losing momentum. The Fed Vice Chairman Janet Yellen and San Francisco Fed President John Williams gave statements last week that showed a willingness to support stimulus program.

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