(Reuters) – Chicago Federal Reserve President Charles Evans on Thursday said he does not expect the economy to meet the thresholds the Fed has set for lifting interest rates until 2024.
While he expects the U.S. unemployment rate this year to fall to 4.5%, marking “substantial progress,” inflation is still too low.
“Inflation will be the real test,” Evans said at a Women in Housing and Finance Public Policy luncheon, noting that the Fed has said it will not raise rates until the economy reaches inclusive, full employment, and inflation has not only hit the Fed’s 2% target but is on track to exceed it for some time.
Most Fed policymakers agree with Evans. But markets are skeptical: interest-rate futures are now pricing in about three quarter-percentage point rate hikes by the end of 2023.
(Reporting by Ann Saphir; Editing by Jonathan Oatis and Andrea Ricci)