Chicago Federal Reserve Chairman Charles Evans said the central bank stands by its commitment to bringing inflation down, even if it means people losing their jobs.
Three weeks before the Fed is expected to approve its fourth straight 0.75 percentage point rate hike, the central bank official told CNBC he hoped to minimize the economic damage.
“Ultimately, inflation is the most important thing to get under control. That’s job one,” Evans said during a live interview with Squawk on the Street. “Price stability creates the conditions for stronger growth in the future.”
Markets will take a fresh look at producer and consumer price indices later this week. Both have seen cost of living increases near their highest level in more than 40 years.
On the jobs front, the Bureau of Labor Statistics reported Friday that nonfarm payrolls rose by 263,000 in September, while the unemployment rate fell to 3.5%, the lowest since late 1969. However, Fed officials, including Chairman Jerome Powell, have warned to expect “some pain” from the Fed’s anti-inflation efforts, which could include higher levels of unemployment.
“When unemployment goes up, it’s unfortunate. When it goes up a lot, it’s really very difficult,” Evans said. “But price stability makes the future better.”
The Fed was again criticized by ARK Investment Management founder Cathie Wood on Monday. In an open letter to policymakers, the ETF manager said she was worried rate hikes would be based on backward-looking data and could send the economy into a “deflationary bust”.
Evans said he sees some signs that inflation is easing as pressures in the supply chain ease. He advocated a policy stance in which the Fed brings rates to a hawkish level where it can monitor the impact.
Evans is a non-voter on the rate-setting Federal Open Market Committee and has announced that he will step down in early 2023.