By Karen Pierog
MILWAUKEE (Reuters) – The U.S. Federal Reserve could go through 2020 without altering its current stance of monetary policy and it would take a slowdown in economic growth to change that path, Chicago Fed President Charles Evans said on Thursday.
“My expectation is we could go through the entire year without rate changes,” Evans said during an economic forecast panel discussion in Milwaukee, Wisconsin.
The U.S. central bank has made clear that it plans to keep interest rates unchanged for the foreseeable future, barring a significant change in the U.S. economic outlook.
The Fed cut interest rates three times last year as it seeks to keep the longest U.S. expansion on record going and policymakers have repeatedly said they now see the economy as being in a “good place.”
Evans, who supported the lowering of borrowing costs last year, has previously said he does not see a need for the Fed to lower rates any further, echoing his fellow policymakers.
On Thursday, he too reiterated that the U.S. economy is in a very good place and that rates are at the right level to support it, pointing out that economic fundamentals are strong.
The unemployment rate is near a 50-year low and consumer spending, which accounts for roughly 70% of U.S. economic activity, remains robust.
Asked what it would take for him to change that point of view, he told reporters the economy would have to perform worse than expected.
“That would call for some type of response on the downward fashion,” Evans said. “But I’m not expecting that.” The Chicago Fed chief is forecasting a U.S. economic growth rate of 2% to 2.25% for this year.
He also said that signs of a truce between the United States and China, locked in a trade war for more than a year and a half, could reduce economic uncertainty that stifled business investment last year.
China’s Vice Premier Liu He will sign a “Phase 1” trade deal in Washington next week, the Chinese commerce ministry said on Thursday.
(Reporting by Karen Pierog; writing by Lindsay Dunsmuir; Editing by Chizu Nomiyama)