Feb. 7 (Bloomberg) -- Charles Evans, president of the Federal Reserve Bank of Chicago, said today the central bank may stop its asset-purchase program before unemployment falls to 7 percent.
“I tend to think it might be possible to turn off the quantitative easing,” Evans said in a CNBC interview. “We might be able to stop before 7 percent” assuming momentum builds and keeps going.
Minutes from the Federal Open Market Committee’s December meeting showed that policy makers debated when to end the monthly purchases of $45 billion in Treasuries and $40 billion in mortgage bonds. The central bank has pledged to continue the buying until the labor market improves “substantially.”
Evans, who is a voting member of the FOMC this year, reiterated that quantitative easing would continue until it’s clear the labor market outlook has improved.
“Might be half a year, might be a whole year, could be longer,” Evans said. “I’m optimistic that momentum’s going to pick up this year.”
The FOMC said in December and repeated last month that it will keep interest rates near zero as long as unemployment remains above 6.5 percent and inflation remains no more than 2.5 percent.
“We’re going to keep policy low until the unemployment rate is 6.5 percent,” he said, comparing Fed actions to a half-marathon. “If we still feel good, you know with the run, we might go a little bit longer.”
Evans was the first official to propose linking the central bank’s benchmark rate to economic thresholds, which the committee did for the first time when it set its 6.5 percent goal.
The Chicago Fed chief said today he doesn’t foresee unemployment dropping to 6.5 percent from January’s 7.9 percent until about the middle of 2015.
Evans dissented twice in 2011 in favor of adding stimulus, and was an early advocate for a third round of monetary easing. He has been president of the Chicago Fed since 2007.
To contact the reporter on this story: Jeanna Smialek in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Kevin Costelloe at email@example.com