Progress on inflation has been unsatisfactory, Fed´s Evans says

Progress on inflation has been unsatisfactory and there continues to be "substantial uncertainty" on close the economy is to full-employment, a top US central bank official said.

In a speech delivered overnight in Sydney, the president of the Federal Reserve bank of Chicago, Charles Evans, highlighted how US rate-setters expected core PCE inflation to return to target in two years´ time - versus a 1.7% year-on-year at last count.

Evans also pointed out how that had now been the forecast for the last four years.

Furthermore, monetary policymakers needed to recognise that the risk now was of inflation being "too low" and not "too high", he said.

In any case, and on the subject of the next potential interest rate hike, he believed that “one move isn’t that big of a deal either way”.

“Even though I would like to wait and gather more information and have more confidence about inflation, I think one move would not seriously affect the continuing likelihood that inflation will move up. In that context, anything related to the election or other developments, I think it’s going to come down to how we view inflation and the progress of the labor market.”

"If core inflation was clearly on its way to 2 percent, then I would see the next readjustment of monetary policy toward its long-run neutral level as an appropriate and easy decision. However, as you can tell from my remarks today, I have yet to see clear and convincing evidence that inflation is headed up to 2 percent."

The Federal Reserve should also communicate clearly that it intends on bringing inflation back to 2% sustainably, symmetrically and sooner rather than later, the central banker said.

Charles Evans did not hold a vote on the Federal Open Market Committee in 2016.