United States inflation expectations edge up: New York Fed survey

Dallas Fed president

Dallas Fed president "actively considering" December rate hike

The Federal Reserve should take a more aggressive stance toward boosting inflation and stop talking so much about using interest rates to ensure financial stability, Chicago Fed President Charles Evans said.

He added that even if the Fed does managed to return inflation to its 2 percent inflation target, it would not happen before 2018 or 2019.

Federal Reserve Bank of Chicago leader Charles Evans expressed concern Wednesday that persistently weak inflation in the US may be a more enduring force than central bankers now recognize.

"In order to dispel any impression that 2 percent is a ceiling, our communications should be much clearer about our willingness to deliver on a symmetric inflation outcome, acknowledging a greater chance of inflation at 2.5 percent in the future than what has been communicated in the past", he said in remarks prepared for a speech in London.

Fed officials have mostly written off the decline as owing to "transitory" and "idiosyncratic" factors, and expressed confidence that inflation will soon rise to 2 percent as the labor market continues to tighten.

The three-year-ahead expectation was 2.81 percent, slightly up from the previous month and also at the highest level since April. "So perhaps then it's not surprising that we as a group have not convincingly demonstrated to the public our commitment to a symmetric inflation target".

Despite the slight improvement in year-ahead inflation expectations, consumers expected slower price increases in a year ahead.

Mr. Evans also said he was anxious that too much of the case to boost rates right now rests on fears that very low rates will generate financial instability by way of fueling excessive risk-taking on the back of cheap borrowing costs.

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