Evans Says Fed Needs to Generate Stronger Inflation Overshoot

The U.S. central bank needs to keep monetary policy easy to raise the public’s inflation expectations even after the current bout of inflationary pressures from supply-chain disruptions fades, Federal Reserve Bank of Chicago President Charles Evans said.

“I do not think the supply-side-induced transitory surge in inflation we are seeing today will be enough to do the trick,” Evans said Monday in remarks prepared for a speech at the annual National Association for Business Economics conference in Arlington, Virginia. “I expect that we will need a period of sustained, monetary-policy-induced overshooting of 2% inflation to boost long-run inflation expectations enough to deliver on our mandated goals.”