Lockhart, Evans Differ Over Inflation Reaching 3%
Lockhart said that prices accelerating at a 3 percent rate or faster make him “pretty nervous,” while Evans said that the central bank’s 2 percent inflation target is “not a ceiling.” The Fed hasn’t done enough to describe its tolerance for inflation, Evans said. Both Fed presidents spoke on a panel in Beverly Hills, California.
“We do allow the possibility” that inflation will top 2 percent, Evans said. “We want a vibrant economy.”
Still, Evans said that the Federal Open Market Committee has “no taste” for policy that would allow inflation to run at a much higher rate, such as 6 percent.
“That would not be the right thing to do,” Evans said. “I certainly agree with that.”
Lockhart, who votes on the FOMC this year, reiterated his view that he’s “skeptical” additional bond buying by the central bank would strengthen the recovery.
Evans, who doesn’t vote on the FOMC in 2012, said he doesn’t “see the need” for “strong accommodation” going away until the U.S. economy expands at a 4 percent rate for some years.
“I think we’re going to need more of this,” Evans said.
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