(Washington) Chicago Federal Reserve Chairman Charles Evans on Tuesday said he was “reasonably confident” about a return to full employment within three years, but was more worried about inflation, which is expected to remain low, despite a temporary spike.
Posted on February 3, 2021 at 5:57 p.m.
–
–
“I am reasonably confident that we can achieve our goal of full employment over the next three years. But I’m more concerned about the outlook (regarding) inflation, “which” is far too low today, “said Charles Evans, who is one of the 2021 voting members of the Fed’s monetary committee.
The Fed, which is the US central bank and has 12 regional banks, has a dual objective: full employment and annual inflation of 2%. She indicated last summer that she could temporarily tolerate an overtaking.
“I think the unemployment rate will return to close to its pre-pandemic level of 3.5% by the end of 2023. Regarding inflation, there is still a long way to go”, detailed the president of the Chicago Fed during a virtual conference at Oakland University (Michigan).
Consumption should however jump, especially in the spring, when activity will resume with the vaccination of a large part of the population. Prices should therefore rise, especially since those of March and April 2020, to which they will be compared, were down because of the first confinements.
Inflation over one year could then exceed 2%, but this will only be temporary. “I expect inflation to stabilize and end the year in a range of 1.5% to 1.75%,” said Charles Evans.
In 2020, annual inflation was 1.3%, slowing down from 2019, according to the PCE index, used by the Fed.
Charles Evans also expects gross domestic product (GDP) growth of 5% to 6% in 2021, then 2% to 3% in 2022 and 2023.
He was also very concerned about “the impact of the pandemic on children and young adults” whose schools have been closed since March.
He spoke of “the trauma linked to isolation, food insecurity, concerns about housing stability and uncertain employment prospects for themselves and the adults around them”.
“If left unresolved, these disruptions could easily leave lasting scars that would make it even more difficult for these young people to realize their economic potential and other aspirations,” he said.
–
