Chicago Federal Reserve President Charles Evans told CNBC on Friday he’s still nervous about continued low inflation and would prefer to “wait a little longer” than this month’s meeting before raising interest rates for the first time in 2018.
The financial markets, however, view a March rate increase as a virtual lock. Central bankers have projected three rate increases for 2018, the same as last year. Some economists even see four rate hikes this year.
“My own preference would be to wait a little bit longer, let the March anomalous inflation rate from a year ago fall out,” said Evans, who is not a policy voting member this year but takes part in the meetings.
By midyear, if inflation does show signs of increasing to the Fed’s 2 percent target, Evans said, he would be “much more confident” to continue “a gradual upward adjustment of the funds rate.” The fed funds rate — what banks charge each other for overnight loans — stands in a 1.25 to 1.50 percent range after the last Fed increase in December.
The trajectory of rates is much more important than whether there are “three, two, four rate increases” this year, Evans said.