CHICAGO (Reuters) - Chicago Federal Reserve Bank President Charles Evans on Tuesday said he takes "very seriously" the possibility that the public is sceptical about the U.S. central bank's commitment to get inflation back up to its 2-percent goal.
"Looking at inflation expectations, looking at market reactions, I think looking at the fact that core inflation has been 1.5 percent and less for the last six years, there's a reasonable concern that people could have out in the public," Evans said during a discussion of U.S. government debt at the University of Chicago's Booth School of Business. "I am not sure that it's embedded as solidly as a lot of people take for granted."
Evans and other Fed officials believe that credibility is key to monetary policy effectiveness, and that if the public does not believe the Fed wants to hit its goals, it will be that much harder to reach them. Evans has said he believes the Fed may need to keep interest rates near zero into next year so as to boost inflation back to the Fed's goal.