Charles Evans, Interview: Reuters (print)

Excerpts from the article are below.

Rate Hikes and the Terminal Rate: “From here on out, I don’t think it’s front-loading anymore, I think it’s looking for the right level of restrictiveness.”

“Stepping down to a pace that’s not 75 (basis points), giving the (Federal Open Market) Committee a little bit of runway to see more data before you get too far ahead of where you eventually want to be, makes sense to me.”

Evans said he supported this week’s move, and also expects the Fed to eventually need to raise its benchmark overnight interest rate “slightly higher” than the 4.50%-4.75% range he and many of his fellow policymakers had previously thought would mark the peak of the current tightening cycle.

“There’s ample capacity” to tighten monetary policy even at a slower pace, he said. “We have accomplished front-loading and now we are at the point where we are looking for the right level of restrictiveness and mindful of data dependency in a world where inflation just lags more than the real economy.”

“If it were the case that the Committee still saw the need to increase rates expeditiously, because inflation reports weren’t as favorable as we would like, you can do 50 (basis points), repeatedly, and in four meetings you’ve increased by 200 basis points,” Evans said.

Overtightening: “You’ve got to be close enough to where you kind of think it’s not that much further, or it becomes very much two-sided. You are looking for the point where you’ve got two-sided risks,” Evans said. “I think most people would say at the moment it’s not two-sided: inflation reports are likely to still be disappointing even if they begin to improve.”