Fed’s Evans Says Rate Cuts Leave U.S. Economy in Good Place

(Bloomberg) --

Federal Reserve Bank of Chicago President Charles Evans said the central bank’s three interest-rate cuts this year have left the U.S. economy in a good place.

“We’ve made a nice adjustment that takes account of risk management concerns,” Evans told reporters Wednesday after a talk at the Council on Foreign Relations in New York.

“The setting of policy is good for the real risks that the economy is facing,” Evans said. “It’s good for getting inflation to 2%.”

Fed officials last week cut interest rates by a quarter-percentage point for a third time this year, the first reductions since the financial crisis. They cited the combination of trade-policy uncertainty, slowing global growth and below-target inflation as a rationale for the cuts, which partially unwound more than 2 percentage points of increases between December 2015 and December 2018.

In a press conference explaining the latest decision, Fed Chair Jerome Powell said it would take “a material reassessment” of the outlook for policy makers to adjust rates again. A stronger-than-forecast report on jobs published Nov. 1 reinforced investors’ perceptions that easing is over for now, according to the prices of futures contracts linked to the central bank’s benchmark overnight rate, which currently stands just above 1.5%.

Read more: U.S. Hiring Resilient With 128,000 Gain, Validating Fed Pause

“The economy is in a good place now,” Evans said. “The consumer has been very strong. I think the most recent data reflect that.”

New York Fed President John Williams shared the view that the central bank’s actions were helping support the economy.

“Monetary policy is moderately accommodative,” he said Wednesday at a separate event in New York. “I see this as a reflection of some of these factors global factors especially that are causing or fostering slower growth, and also the fact that inflation is still a few tenths below” the Fed’s 2% target, he said.

The Fed has been below that goal for most of the last seven years, a shortfall that Williams said has been making it harder to lift price pressures higher.

“People expect inflation to stay very low and I think that’s a factor that’s holding inflation down,” he said.

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