Chicago Federal Reserve bank president Charles Evans on Wednesday argued that proactively cutting rates in response to downside risks when rates are low will provide a buffer for the economy and helps it absorb shocks. “Policy probably is in a good place after two rate cuts,” Evans added.
The US Dollar Index largely ignored these comments and was losing 0.12% on the day at 98.20 at the time of press. Below are some key quotes from Evans, per Reuters.
“Keeping an open mind to arguments supporting further rate cuts.”
The Fed would act aggressively if faced with an imminent downturn.”
“Low rates leave the Fed with a smaller capacity to counteract negative shocks to the economy.”
“Downside shocks that weaken growth or inflation are more costly when the Fed is limited in how much it can lower rates.”
“Too much accommodation when inflation is low could help the Fed reach the target sooner.”
“A modest overshoot of inflation could help meet the inflation target.”
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