U.S. economy needs stimulus, fiscal impasse hurting: Fed's Evans

Reuters

WASHINGTON (Reuters) - The U.S. economy still requires easy monetary policy because the jobless rate remains too high and fiscal headwinds continue to hamper growth, a top Federal Reserve policymaker said on Wednesday.

"If you look at our scorecard in the U.S., the unemployment rate continues to be a couple of percentage points above the sustainable rate and inflation is under-running, so that calls for more accommodation," Charles Evans, president of the Federal Reserve Bank of Chicago, said during a panel discussion organized by the International Monetary Fund.

"I think that the U.S. economy has been facing fiscal headwinds for a couple of years now," Evans told the panel, adding, "the current situation is one that gives me great pause in looking at things."

The U.S. government has been in partial shutdown since October 1 because members of Congress have been unable to agree on a budget that would keep the government running.

"At the moment, this is hurting in a pretty strong fashion so it's fraught with risk and if everyone would help out by (giving) more lift to the economy, we would all be in better shape," Evans said.

Speaking on the same panel Kazuo Momma, assistant governor at the Bank of Japan, noted there had been a significant improvement in the inflation situation in Japan and that the central bank would keep up its pace of stimulus.

"So we are going to continue the pace of monetary expansion," he said. "We are fairly optimistic about the situation we have now."

Japan, which has been battling deflation for years, launched an aggressive stimulus program in April, while the Fed last month decided against tapering its bond buying program aimed at keeping rates low and encouraging hiring.

(Reporting by Krista Hughes; Writing by Andrea Ricci; Editing by Chizu Nomiyama)

View Comments (1)