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Speeches by Charles Evans on the topic of the dual mandate of the Fed.

Last Updated: 06/03/16

Evans on the Federal Reserve's Dual Mandate

Reflections on the Current Monetary Policy Environment

"...as I survey the economic landscape, I see other factors that could hold growth back even after these impediments recede. Broadly speaking, an economy’s long-run growth potential depends upon increases in its available productive resources and the technological improvements that enable those resources to produce more."

Speech delivered at the Global Interdependence Center in London, England, on June 3, 2016. Read more...

The Implications of Slow Growth for Monetary Policy

"My baseline outlook has real gross domestic product (GDP) growing at a moderate 2 to 2-1/2 percent annual rate in 2016 and inflation gradually approaching 2 percent over the next three years. But given the current economic landscape in the U.S. and internationally, I see the risks to both of these projections as weighted to the downside."

Speech delivered at the Credit Suisse Asian Investment Conference in Hong Kong on April 5, 2016. Read more...

Connecting the Dots on Monetary Policy

"...lower real rates imply lower nominal rates even when inflation is at its target. So, the equilibrium federal funds rate, which is associated with a neutral monetary policy — policy that is neither expansionary nor contractionary — is lower in an economy with a lower potential output growth. Therefore, the FOMC must take estimates of potential output growth into account when calibrating the stance of monetary policy."

Speech delivered at the Corridor Business Journal in Cedar Rapids, IA on January 13, 2016. Read more...
 

Connecting the Dots on Monetary Policy

"So what about this year? Well, I’ve scaled things back a bit, and anticipate the economy will grow in the range of 2 to 2-1/2 percent in 2016. So, close to or a bit better than this past year. I also expect the unemployment rate to come down a couple of tenths and end the year at about 4-3/4 percent."

Speech delivered at the Wisconsin Bankers Association in Madison, WI on January 7, 2016. Read more...

The Case for a Slow Return to Monetary Policy Normalization

"...how close are we to achieving the goals of our dual mandate? There is no doubt that labor markets have improved significantly over the past seven years. Job growth has been quite solid for some time now. And today, at 5 percent, the unemployment rate is half what its peak was during the recession and just a tenth of a percentage point above the FOMC’s median view of the long-run normal rate. That said, a few other labor market indicators lead me to believe that there still remains some additional resource slack beyond what is indicated by the unemployment rate alone."

Speech delivered on December 1, 2015, before the Lansing Regional Chamber of Commerce. Read more...

A Cautious Approach to Monetary Policy Normalization

"How does this asymmetric assessment of risks to achieving the dual mandate goals influence my view of the most appropriate path for monetary policy over the next three years? It leads me to conclude that 1) a later liftoff and 2) a more gradual normalization of our monetary policy setting will best position the economy for the potential challenges ahead."

Speech delivered on November 12, 2015, at the National Communities Council Fall Leadership Forum. Read more...

Risks Call for a Gradual Approach to Normalizing Policy

"So what are these inflation risks? With prospects of slower growth in China and other emerging market economies, low energy and import prices could exert downward pressure on inflation longer than I anticipate."

Speech delivered on October 12, 2015, at the World Steel Association Annual Conference in Chicago. Read more...

Monetary Policy: Avoiding the Hazards

"A number of factors inform my inflation forecast. First, low energy prices and increases in the dollar continue to generate downward pressure on consumer prices. Second, putting aside the swings in energy prices and the like, core inflation tends to change quite slowly — particularly when it is at low levels. So low core inflation today tends to be a harbinger of low overall inflation for some time. Third, wage growth has been very subdued, coming in around 2 percent to 2-1/2 percent for the past six years. This is well below the 3 to 3-1/2 percent pace we would expect in an economy growing at its potential with inflation at 2 percent. Although higher wage growth is not necessarily a strong predictor of inflation, it is a good corroborating indicator of underlying inflation trends."

Speech delivered on October 9, 2015, before the CFA Society in Milwaukee, WI. Read more...

Thoughts on Leadership and Monetary Policy

"Given these operational objectives, how close are we to achieving the dual mandate? There is no doubt that labor markets have improved significantly over the past seven years. Job growth has been quite solid for some time now, and the unemployment rate has declined significantly from its peak of 10 percent in 2009 and currently stands at 5.1 percent... . However, a number of other labor market indicators lead me to believe that there still remains some additional resource slack beyond what the unemployment rate alone indicates: Notably, a large number of people who are employed part time would prefer a full-time job; the labor force participation rate is quite low, even after accounting for demographic and other long-running trends; and wage growth has been quite subdued."

Speech delivered on September 28, 2015, at the Marquette Leadership Forum in Milwaukee, WI. Read more...

Low Inflation Calls for Patience in Normalizing Monetary Policy

"My current view is that my economic outlook and my assessment of the balance of risks will evolve in such a way that I likely will not feel confident enough to begin to raise rates until early next year. But there is no prescribed timeline that must be adhered to — and no pre-set script to follow — other than that we should let economic conditions and risks to the outlook be our guides."

Speech delivered on May 18, 2015, at theSwedbank Global Outlook Summit in Stockholm, Sweden. Read more...

Managing Risks for Manufacturing Cities and the Broader U.S. Economy

"I think the outlook for growth in economic activity and the labor market is good. However, inflation is too low, and I expect it will be so for some time."

Speech delivered on May 4, 2015, at the Columbus Economic Development Board Annual Meeting in Columbus, IN. Read more...

Risk Management in an Uncertain World

"Of course, at some time, it will become appropriate to increase the federal funds rate. For me to feel comfortable doing so, I will need to be confident enough that we will achieve our dual mandate goals within an acceptable period of time and that we are at low risk of regressing back to economic conditions that necessitate policy rates returning to their zero lower bound."

Speech delivered on March 25, 2015, at the Official Monetary and Financial Institutions Forum in London, England. Read more...

Low Inflation Calls for Patience in Normalizing Monetary Policy

"Let’s be confident that we will achieve both dual mandate goals within a reasonable period of time before taking actions that could undermine the very progress we seek."

Speech delivered on March 4, 2015, at the Lake Forest-Lake Bluff Rotary Club in Lake Forest, IL. Read more...

Monetary Policy Normalization: If Not Now, When?

"The FOMC should not simply set its policy instruments by mechanically aligning them with historical norms if those norms are not currently relevant for the conditions needed to attain both of our dual mandate goals. Rather, our policy instruments should be set to achieve our ultimate goals as efficaciously as possible given current and prospective economic conditions, all the while with an eye on managing against important risks to the outlook."

Speech delivered on October 13, 2014, at the annual conference of the National Council on Teacher Retirement in Indianapolis, IN. Read more...

Monetary Policy Normalization: If Not Now, When?

"When achieving the dual mandate called for additional monetary policy accommodation, the FOMC turned to other less conventional approaches, such as large-scale asset purchase programs — what many of you have heard referred to as "QE," or quantitative easing — and forward guidance about how long the fed funds rate is likely to remain near zero. I believe these efforts have been very beneficial in helping the economy make significant progress and bringing us back closer to our policy goals."

Speech delivered on October 8, 2014, at the BMO Harris and Lakeland College Economic Briefing in Plymouth, WI. Read more...

 

Patience Is a Virtue When Normalizing Monetary Policy

"The FOMC should not simply set its policy instruments by mechanically aligning them with historical norms if those norms are not relevant harbingers for the attainment of both of our dual mandate goals. Rather, our policy instruments should be set to achieve our ultimate goals as efficaciously as possible given current and prospective economic conditions, all the while with an eye on managing against important risks to the outlook."

Speech delivered on September 24, 2014, at the Peterson Institute Conference on Labor Market Slack in Washington, DC. Read more...

Monetary Goals and Strategies

“I like to illustrate our balanced approach to achieving our dual-mandate goals with what I refer to as a bull’s-eye scorecard (chart 3). The bull’s-eye in the center illustrates where we would like to be. In this case, the goals are 2 percent inflation over the medium term and unemployment at its natural rate, taken here to be 5-1/4 percent, which is my long-run projection. The scorecard shows an equal weighting of policy misses around our inflation and unemployment objectives; that is, each circular ring is a collection of unemployment and inflation rates that should be equally uncomfortable for FOMC participants.”

 

Speech delivered on April 9, 2014, at the 23rd Annual Hyman Minsky Conference in Washington, DC. Read more...

Accommodative Monetary Policy and Macroprudential Safeguards

"How does financial stability dovetail with the Fed’s dual mandate? There is clearly an interdependent relationship between them. A strong and robust economy with low inflation provides a key stabilizing force for beneficial credit intermediation and robust financial markets."

 

Speech delivered on February 4, 2014, at the Detroit Economic Club in Detroit, MI. Read more...

Recurring Themes for the New Year

"We have been clear about our goals. We are dedicated to achieving our statutory dual mandate of maximum employment and price stability. We certainly have turned to unprecedented actions to get the job done — near-zero short-term interest rates; strong forward guidance about keeping rates low for well after the economic recovery strengthens; and large-scale assets purchases that have boosted our balance sheet from about $800 billion to more than $4 trillion. And we must continue to be willing to use these tools to put us on a clear track back to full employment and inflation averaging our 2 percent target."

 

Speech delivered on January 15, 2014 at the Corridor Economic Forecast Luncheon in Coralville, IA. Read more...

Financial Stability and Monetary Policy: Multiple Goals, Multiple Tools

"If you believe that financial stability can only be achieved through higher interest rates — interest rates that would do immediate damage to meeting our dual mandate goals at a time when unemployment is still unacceptably high — then we ought to at least ask ourselves if the financial system has become too big and too complex."

 

Speech delivered on October 18, 2013, at the Financial Management Association Annual Meeting Luncheon in Chicago, IL. Read more...

How Much Longer? (Only the Data Know)

"Another principle is that when setting policy, we will take a balanced approach to achieving our dual mandate objectives. These principles will govern our judgment of whether or not it will be appropriate to raise the fed funds rate when we hit an unemployment rate of 6-1/2 percent."

 

Speech delivered on October 17, 2013, at the 2013 Wisconsin Real Estate and Economic Outlook Conference in Madison, WI. Read more...

Are We There Yet?

"When evaluating policy, we will take into account a couple of basic principles. One is that our 2 percent inflation goal is a symmetric target, not a ceiling…"

 

Speech delivered on September 6, 2013, at the AgFirst Farm Credit Bank in Greenville, SC. Read more...

Economic Conditions and Conditionality

"Progress toward our dual mandate goals is measured by the state of economic conditions, not calendar time. So our policy position should also be dependent on economic conditions, rather than a calendar date."

 

From a speech deliverd on February 28, 2013, to the CFA Society of Iowa in Des Moines, IA. Read more...

 

Monetary Policy at the Zero Lower Bound

"Why tie the open-ended asset purchases and the funds rate liftoff to specific economic conditions? Well, doing this clarifies how our policy decisions are conditional on making adequate progress toward our dual mandate goals..."

 

From a speech delivered on January 14, 2013, at the Asian Financial Forum in Hong Kong, China. Read more...

Monetary Policy in Challenging Times

"I now think a threshold of 6-1/2 percent for the unemployment rate and an inflation safeguard of 2-1/2 percent, measured in terms of the outlook for total PCE (Personal Consumption Expenditures Price Index) inflation over the next two to three years, would be appropriate."

 

From a speech delivered on November 27, 2012, at the C. D. Howe Institute in Toronto, Canada. Read more...

Perspectives on Current Economic Issues

"[M]ore accommodative policy can deliver a stronger economy and the resiliency we are seeking. Furthermore, appropriate policy can deliver these better outcomes without generating inflation that is significantly higher than the Fed’s long-run goal of 2 percent."

 

From a speech delivered on September 18, 2012, at the Bank of Ann Arbor Breakfast in Ann Arbor, MI. Read more...

Managing Monetary Policy Risks

"However, in the rare occasion when tension arises between these two goals [of the dual mandate], policy must be formulated with careful consideration of the relative performance of one objective against the other and of the risks to the outlooks for both policy goals."

 

From a speech delivered on January 11, 2012, at the Lake Forest-Lake Bluff Rotary Regular Meeting in Lake Forest, Illinois. Read more... 


 

A Risk Management Approach to Monetary Policy

"We certainly have experienced inflation rates near 3 percent in the recent past and have weathered them well. And 3 percent won’t unhinge long-run inflation expectations. We are not talking about anything close to the debilitating higher inflation rates we saw in the 1970s or 1980s."

 

From a speech delivered on December 5, 2011, at the Ball State University Center for Business and Economic Research Outlook Luncheon in Muncie, Indiana. Read more... 

The Fed’s Dual Mandate Responsibilities: Maintaining Credibility during a Time of Immense Economic Challenges

"I think we should consider committing to keep short-term rates at zero until either the unemployment rate goes below 7 percent or the outlook for inflation over the medium term goes above 3 percent."

 

From a speech delivered on October 17, 2011 at the Michigan Council on Economic Education, Michigan Economic Dinner in Detroit, Michigan. Read more...

The Fed's Dual Mandate Responsibilities and Challenges Facing U.S. Monetary Policy

"The bottom line is that a conservative and tough-minded central banker can still value deviations in unemployment from the natural rate equally with deviations in inflation from its target."

 

From a speech delivered on September 7, 2011 at the European Economics and Financial Centre in London, United Kingdom. Read more... 

Making Sense of Monetary Policy

"Slow progress in closing resource gaps and a medium-term outlook for inflation that is too low lead me to conclude that substantial policy accommodation continues to be appropriate. This accommodative policy will foster a return of economic conditions consistent with our dual mandate."

 

From a speech delivered on May 19, 2011, to the Global Corporate Treasurer Forum in Chicago, Illinois. Read more... 

Monetary Policy: Slow Progress toward Our Goals

"To put it bluntly, with unemployment too high and inflation too low — and both forecasted to stay that way over the next two years — we have missed on both of our policy objectives. There is currently no policy conflict between improving the employment and inflation outcomes."

 

From a speech delivered on February 17, 2011, to the 2011 Rockford Chamber of Commerce Economic Outlook Luncheon in Rockford, Ill. Read more...