Oct. 10 (UPI) — Charles Evans, president of the Federal Reserve Bank of Chicago, said Monday that getting inflation under control will be his top priority, even if it means losing jobs.
“Ultimately, inflation is the most important thing to get under control. That’s job one,” Evans told CNBC on Monday, adding that “if unemployment goes up, that’s unfortunate. If it goes up a lot, that’s really very difficult.”
Evans justified the potential job losses by stating that “price stability makes the future better.”
The Bureau of Labor Statistics reported Friday that unemployment rates had fallen to 3.5% and that non-farm payroll increased by 263,000 in September.
The strong employment figures sent stocks tumbling amid concerns that further monetary policy tightening will lead to a recession as the Federal Reserve continues to fight inflation.
Stocks continued their slide Monday, with the Dow Jones Industrial Average closing down 93.91 points, or 0.32%, to 29,202.88. The Nasdaq Composite fell 110.2 points, or 1.04%, to 10,542.1, its lowest level in two years. The S&P 500 dropped 27.27 points, or 0.75% to 3,612.39.
Evans’ comments on Monday are a continuation of the Fed’s hawkish stance.
In three weeks, the Federal Reserve is expected to approve its fifth interest rate hike in a row, with the goal of curbing inflation. The Fed raised its benchmark federal funds rate by a half-point in May and by 0.75 percentage point in each of June, July and September.
Federal Reserve Chairman Jerome Powell has warned that efforts to control inflation could result in higher unemployment rates.
Evans shared his outlook during the 64th annual meeting of the National Association for Business Economics in Chicago on Monday.
“The Federal Reserve is committed to returning inflation to its 2% average goal,” Evans said. “To do so, I expect we will need to raise rates further and then to hold that stance for a while.”
Evans said he thinks the Fed can bring down inflation relatively quickly while also avoiding a recession.
He has seen signs that the hot labor market may be cooling, with some businesses reporting reduced turnover and less difficulty finding qualified workers.
“As of yet, these anecdotal reports haven’t shown through strongly in the aggregate data, although job growth has moderated some from its extremely rapid pace,” he said.
Evans noted the Fed’s dual mandate objectives of maximum employment and price stability and said that ensuring low and stable inflation will allow for a sustained strong labor market.
Evans doesn’t vote in the Federal Open Market Committee, which sets rates, and is leaving his position in 2023.
