Thu Feb 14, 2008 1:25pm EST
CHICAGO, Feb 14 (Reuters) - Chicago Federal Reserve Bank President Charles Evans said on Thursday that despite substantial headwinds, the U.S. economy is likely to avoid recession as the effects of recent interest rate cuts kick in.
The Fed also needs to be "mindful" of inflation given "disappointing" news on prices, Evans said in remarks prepared for delivery to the Chartered Financial Analysts Society of Chicago.
"The policy actions taken in January, in combination with earlier moves, should help promote moderate growth over time and mitigate the risks to economic activity," Evans said in his first remarks on the economy since late November.
"A relatively accommodative monetary policy is appropriate. At 3 percent, the current federal funds rate is relatively accommodative and should support stronger growth," Evans said.
Evans said real gross domestic product is likely to grow at a "very sluggish rate" in the first half but pick up to near potential by late 2008 and continue at or a bit above that pace in 2009.
Inflation, despite a recent increase, should moderate over the next two years in the face of slower economic growth and a likely decline in energy and commodity prices, Evans said.
Evans is not a voting member of the monetary policy-setting Federal Open Market Committee in 2008. (
Reporting by Ros Krasny, Editing by Chizu Nomiyama)
Fed's Evans: Rate cuts should prevent US recession | Markets | Bonds News | Reuters
Fed's Evans: Rate cuts should prevent US recession
