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Chicago Fed President Charles Evans Resorts to Hope, Does Not Foresee a Recession

Chicago Fed President Charles Evans made a presentation today at the Detroit Economic Club. Let's tune in.
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Charles Evans Chicago Fed President


ForexLive has a nice synopsis Fed's Evans: High prices will persist longer than I thought

  • High prices will persist longer than I thought
  • However high prices are not persistent
  • The Fed has to reposition itself in response
  • By the end of the year will know a lot more about how persistent inflation is
  • Hopefully inflation will be receding
  • Supply pressures are more intense than expected
  • At the end of the year will be able to make choices about more or less restrictiveness
  • We need to position monetary policy much closer to neutral.
  • The US economy has momentum
  • neutral setting for monetary policy is 2.25% to 2.50%
  • Had tough would be at neutral by March 2023; If got there by December, that would be ok too
  • Not going too far, to quickly is important for optionality
  • 50BP hike is worthy of consideration, possibly highly likely
  • The real discussion is how are you want rates to be positioned by the end of the year
  • I don't at the moment expect to see the need for restrictive policy to reign in inflation, but there is a risk


I caught the tail end of the the event. Evans was asked about a recession. Of course he does not foresee one. 

The Fed never spots a recession in advance and former Fed chair Ben Bernanke could not even see one that had already started.

Hope Based Fed 

Neutral Policy 

Too Early to Tell Mission Has Failed

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Need More Time 

Time Not On Fed's Side

That last Tweet fits into my thoughts perfectly.

The Fed will take so much time it will never get to what it perceives as neutral. The economy will be in a severe recession well before the Fed gets to 2.25%.

In my estimation the economy is cooling far faster than anyone realizes and a global recession is a given. 

This post originated at MishTalk.Com.

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