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Fed's Evans says they should be nervous about the yield curve, but the US economy is hard



© Reuters. Charles Evans, President of the Federal Reserve Bank in Chicago, presents a photo in Palm Beach

By Noah Sin

Chicago Central Bank President Charles Evans said on Monday it was understandable for the markets to be nervous when the yield curve has been smooth, although he is still confident of the US economic growth prospects. the monthly rate in Asia on Monday, an inversion that in the past signaled the risk of economic recession.

The yield curve turned on Friday for the first time since mid-2007.

Evans describes the inversion as "fairly narrow"

"We have to take into account that there was a world-wide decline in long-term interest rates" , Evans said in his comments at Credit Suisse (SIX 🙂 Asian Investment Conference in Hong Kong days after the Federal Reserve signaled an end to tightening and abandoning plans to further raise interest rates in 201

9 [19659004] "Part of this is structural, given the lower trend trend , lower real interest rates, "he said," I think that in this environment it is probably more natural for yield curves to be flatter than they were historically. "

Within the conference, Evans said in CNBC in an interview that he can understand why investors are more "careful, waiting and watching – added that the Federal Reserve is doing the same. But, he added, the economic fundamentals are "good" and he expects growth to be around 2% this year.

"Your first reaction is (e)" wow, that's less than what we had "and I think

TIME OF PAUSE

From a monetary policy perspective, Evans said it was the time the US central bank would stop and adopt a cautious position, adding that it did not expect interest rate rises until the second half of next year

Softening its tone a few months ago, Evans, who voted interest rate policy this year, said , that monetary policy is neither adaptable nor restrictive at this stage

. and I want to see inflation, so my own way is not to expect an increase in the interest rate next year, probably the second half, Evans said.

In January he said the Fed could raise interest rates three times in 2019, assuming that the US economy remains relatively strong.

Last week, the US central bank left steady interest rates ranging from 2.25% to 2.5%. Fresh forecasts showed that 11 out of 17 Fed politicians did not expect any change during the year, only two in December.

This unexpected signal was that financial markets quickly rate their price next year.

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