Charles Evans, Interview: Lake Forest – Lake Bluff Rotary Club

“But with the adjustment path for monetary policy that I’m anticipating, I think that the labor market ought to be able to maintain quite a lot of vibrancy. At the end of that, are we at full employment? I just think that we don’t want to unnecessarily put stress on labor markets and small businesses. But we have higher inflation and so we have to make adjustments now.”

“Yeah, one of the challenges for monetary policy in the last 15 years, has been that we’ve been in a low interest rate environment around the world. And when interest rates are low and you go into a recession, monetary policy doesn’t have a lot of capacity to cut rates. Cutting rates in order to get the economy moving forward is basically how we deal with recessions. And if you started at 2% for the Federal Funds rate, you can only cut it to 0. Historically, we’ve needed 5 percentage points of reductions in order to get the economy going.”