Photo: YouTube via FedReserveBoard
At a conference in Hong Kong last night, Chicago Federal Reserve President Charlie Evans offered another clue on when the Fed may begin to tighten.Evans delivered a speech titled “Monetary Policy at the Zero Lower Bound.” He also gave some guidance on what the Federal Reserve deems to be “substantive” improvement in labour markets, which the central bank has identified as a key condition for halting quantitative easing.
“One good indicator of labour market improvement would be if we saw payroll employment increase by 200,000 each month for a number of months. We’ve been averaging about 150,000, but it’s been very uneven … we need a higher pace of employment growth and less volatility in that pace,” Chicago Fed President Evans said.
The creation of 1 million jobs over six months would be a “substantive” improvement, but bringing unemployment down to the key level of 6.5 per cent was likely to take much longer, probably until mid-2015, he said, speaking at the Asian Financial Forum in Hong Kong.
Evans’ comments are another attempt to clear up the uncertainty surrounding when the Fed’s open-ended bond buying may end. In a recent interview, St. Louis Fed President James Bullard said that if unemployment neared 7 per cent by the end of the year, then the Fed may think about ending asset purchases.
Evans joins the board of voting members on the Federal Open Markets Committee this year. His comments last night show he is a bit more dovish than those of Bullard – Evans doesn’t think the U.S. will see 7 per cent unemployment until sometime in 2014.
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