The Federal Reserve might hold interest rates close to zero for three more years, said Cleveland Fed President Charles Evans on Thursday.
“I suspect that it might be 2024 before we actually raise the interest rate target,” Evans said, during a webinar sponsored by the Women in Housing and Finance.
The Fed could proceed faster if inflation sustainably begins to move up, he added.
Evans, who is a voting member of the Fed’s interest-rate committee this year, is part of the majority of Fed officials who don’t see the first rate hike until sometime 2023.
He said that “inflation is going to be the real test for whether or not it’s time to lift off.”
The Fed has said it needs to see inflation at 2% with the prospect it it going to overshoot before it will raise rates.
Evans said the Fed would move “slowly” to raise rates and that means monetary policy will still be relatively easy.
While many in the market are worried about possible higher inflation from the recent stimulus package, Evans noted that some increase in inflation would be welcome at the U.S. central bank.
“Too low inflation is no good,” Evans said.
Evans was optimistic about the outlook, but said he was “nervousness about the unevenness” in growth, with Black unemployment so much higher than white unemployment.