Fed’s Evans Brushes Back Market Pressure for Interest-Rate Cuts

(Bloomberg) -- Federal Reserve Bank of Chicago President Charles Evans stopped short of endorsing the idea the U.S. central bank should cut interest rates in the face of growing pressure from financial markets.

“On its face, it suggests the market sees something that I haven’t yet seen in the national data,” Evans said Tuesday in an interview on CNBC when asked about futures pricing showing investors expect half a percentage point of rate easing this year.

“With inflation being a little bit on the light side, there’s the capacity to adjust policy if that’s necessary, but the fundamentals for the economy continue to be solid. The consumer is solid. I think we have to think through what this really means.”

Evans, who votes on monetary policy this year, has been one of the more dovish voices on the central bank. Chair Jerome Powell is scheduled to speak later Monday morning when he makes remarks at a policy conference in Chicago.

The yield on 10-year U.S. Treasuries Monday fell below 2.1%, the lowest since September 2017, and stocks continued a recent decline amid concern that the deepening trade spat between the U.S. and some of its largest trading partners would slow global growth. President Donald Trump also widened the trade worries by threatening Mexico with new tariffs over border security issues.

Evans tried mostly not to overreact to the trade news, saying “We have to be careful in looking at where the economy is and where we think it is going.”

But he acknowledged he’s still worried about inflation running below the Fed’s 2% objective, while signaling he’s in no rush to move rates now.

“I’m pretty comfortable with where we are at the moment, but there is uncertainty for sure,” he said.

©2019 Bloomberg L.P.

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