Fed official supports September start for bond reductions | National – California News

Fed official supports September start for bond reductions | National – California News

WASHINGTON (AP) — A member of the Federal Reserve’s interest-setting committee said Wednesday it would be appropriate for the central bank to announce next month that it will begin trimming its $4.5 trillion balance sheet, but wait until December before raising a key interest rate again.

Charles Evans, the president of the Fed’s regional bank in Chicago, said he does not expect the balance sheet reduction to make much of a market impact because the move has been “well-choreographed.”

Speaking to a group of reporters, Evans added that he believes waiting until December to raise rates would give the Fed time to assess whether inflation is moving back toward the Fed’s 2 percent annual target.

Evans joked that he would like to see inflation rise above the Fed’s 2 percent target “at some point in my Fed career.” Evans, who has a vote on the Fed’s 9-member policy committee this year, is viewed as a leading “dove” — a group of Fed officials who believe it is important to push unemployment as low as possible as long as inflation remains under control.

The Fed’s two goals are to pursue interest-rate policies that foster maximum employment and price stability. The central bank has succeeded on the employment front with the jobless rate now at a 16-year low of 4.3 percent, but it has had trouble lifting prices to what it considers an optimal rate of 2 percent annual increases.

In fact this year, the Fed’s preferred measure of inflation has been backtracking, dropping to a 12-month increase of 1.4 percent in June, below the 2.2 percent 12-month…

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