Downside risks to inflation weigh on interest rate outlook

President of the Federal Reserve Bank of Chicago Charles Evans said on Friday that, while he could support two rate hikes this year, given the downside risks to inflation, raising rates just once more might be more appropriate.

“The one lingering difficulty, I would say, and it’s an important one, is that inflation pressures are still under-running our 2% objectives in the US […] At the moment, I think the downside risks still predominate,” Evans was quoted by Bloomberg as saying.

The Chicago Fed Chief, who has a vote on the rate-setting Federal Open Market Committee this year, is known as one of the central bank’s biggest advocates for maintaining accommodative policy.

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