By Ann Saphir
(Reuters) -Chicago Federal Reserve Bank President Charles Evans on Tuesday said the Fed could raise its policy target range to 2.25%-2.5% by year end and then take stock of the state of the economy, but if inflation remains high will likely need to hike rates further.
"Probably we are going beyond neutral -- I mean, that's my expectation," Evans said at the Economic Club of New York. Most Fed policymakers estimate neutral to be somewhere between 2.25% and 2.5%.
Evans noted some "positive" developments in the most recent U.S. inflation report, which showed consumer prices rose 8.5% in March, but a slowdown in some goods inflation, including for used cars. If that continues, it could help push broader inflation down.
But, he added, the data could also go the other way, with Russia's invasion of Ukraine and the COVID-19 lockdowns in Shanghai adding to the supply chain problems that have been pushing inflation higher.
"If inflation for some reason began to re-accelerate that would be a cause of great concern," Evans said.
The Fed next meets in May and is widely expected to raise rates by a half percentage point then and again in June before perhaps settling into quarter-point hikes for the rest of the year, a pace that would get rates to Evans' estimated range of neutral by December.
(Reporting by Ann Saphir; Editing by Andrea Ricci)