Chicago Federal Reserve President Charles Evans said the central bank is holding fast in its commitment to bring down inflation even when it means people losing their jobs.
Speaking three weeks before the Fed is predicted to approve its fourth consecutive 0.75 percentage point rate of interest increase, the central bank official told CNBC he hopes to attenuate economic damage.
“Ultimately, inflation is a very powerful thing to get under control. That is job-one,” Evans said during a live “Squawk on the Street” interview. “Price stability sets the stage for stronger growth in the long run.”
Markets will get a fresh take a look at producer and consumer price indexes later this week. Each have been showing cost-of-living increases near their highest levels in greater than 40 years.
On the employment front, the Bureau of Labor Statistics reported Friday that nonfarm payrolls increased 263,000 in September, while the unemployment rate fell to three.5%, tied for the bottom level since late 1969. Nevertheless, Fed officials including Chair Jerome Powell have warned that they expect “some pain” from the Fed’s inflation-fighting efforts that might include higher levels of joblessness.
“If unemployment goes up, that is unlucky. If it goes up rather a lot, that is really very difficult,” Evans said. “But price stability makes the long run higher.”
The Fed faced a renewed bout of criticism Monday from ARK Investment Management founder Cathie Wood. In an open letter to policymakers, the ETF manager said she is fearful that rate of interest hikes are based on backward-looking data and will send the economy right into a “deflationary bust.”
Evans said he sees some signs that inflation is letting up as supply chain pressures ease. He advocated a policy stance where the Fed gets rates to a restrictive level at which point it may well monitor the impact.
Evans is a nonvoter on the rate-setting Federal Open Market Committee and has said he’s leaving his position early in 2023.