FRANKFURT (Reuters) – The U.S. Federal Reserve will raise interest rates at least twice this year, and possibly up to four times – although that would require an improvement in fundamentals, Chicago Fed President Charles Evans said on Wednesday.
Explaining why he is more cautious in his rate outlook than some of his colleagues, Evans said the U.S. could afford to build a small inflation “buffer”, letting price growth slightly overshoot the Fed’s 2 percent target instead of shooting exactly for the target.
“I am at a point where two total rate increases in 2017 seem very safe. Three? It could work out that way if there is more confidence in the outlook. Four? It could work out that way if things proceed even better,” he told reporters on the sidelines of a conference.
Commenting on a proposed U.S. border tax, Evans said the proposal had “some merits” but it would not trigger a massive change in the value of the dollar and the economy’s own adjustment might be lengthy and at times painful.
(Reporting by Balazs Koranyi; Editing by Hugh Lawson)