CHICAGO (Reuters) – With inflation as low as it is, Chicago Fed President Charles Evans told reporters Friday that he “can’t imagine” raising the fed funds rate even when unemployment falls to 6.25 percent, below the threshold the Fed has set for considering a rate hike.
The fed funds rate is the rate that banks lend cash to each other overnight.
Why inflation is so low despite super-easy monetary policy is a big “puzzle,” Evans said. Though he continues to think it is a temporary phenomenon, and partly due to low inflation worldwide, he said He is watching it closely in case it turns out to be due to some more “nefarious” factor.
The Fed’s bond-buying program will probably be over when unemployment hits 6.5 percent, Evans said, although he declined to give his forecast of when that might be
(Reporting by Ann Saphir; Editing by Leslie Adler)