Expect additional interest rate hikes this year, according to the head of the Chicago Federal Reserve.
During his speech to members of the City Club of Chicago, Federal Reserve Bank of Chicago President Charles Evans said policy makers were correct in refraining from raising the interest rates earlier this month coming off a tough start to 2016. That included weaker than expected corporate spending, lower commodities prices, and the economic slowdown in China.
But Evans told reporters after his speech that the Fed is on track to raise rates later this year.
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“My projections would have two more this year on the basis of the outlook,” Evans said. “I couldn’t tell you which meeting that would be without having a firmer idea of what the data are doing.”
With the national unemployment rate at 5.5 percent, conditions for an interest rate increase are dependent on whether the Federal Reserve can reach its inflation goal of 2 percent.
Evans said states like Illinois face difficult roadblocks with fewer people coming into the workforce.
“I think there is a lot of uncertainly way beyond the borders of Illinois that might be responsible for some of that,” Evans said.
Evans added that legislative standstills like the budget impasse in Springfield are contributing factors to the Fed’s decision on whether to raise interest rates.
“I think states are on a lot of different challenges, there’s no doubt about that,” Evans said. “The fiscal situation is an important one, having a budget agreed to, and paying your bills is an important part of that.”
Evans is not a voting member this year of the Federal Reserve’s policy committee, which decides interest rates.