Chicago Fed dove Evans sees current pace of QE through year-end
Chicago Fed dove Evans sees current pace of QE through year-end as most likely, with Fed policies working as well as they can for now. QE3 success is not a reason to do less, since low inflation suggests policy is too tight, though the Fed could taper asset purchases if jobs growth was very strong and the Fed more confident in the outlook. He wants to be sure any QE reduction is not perceived as premature or weak-kneed. Evans is looking for 2.5-3.5% growth ahead, unemployment at 7% by end-2014 and inflation not a worry for the foreseeable future. He sees QE3 outweighing the costs by a wide margin, and appropriate until jobless rate below 6.0% assuming inflation is still tame. Inflation rises above 2% when the jobless rate hits 6.5%, then a hike would be expected before long. Overall, this is fairly dovish as expected, with a couple very qualified more hawkish references
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