March 22--The Federal Reserve could raise interest rates twice this year given economic conditions, Federal Reserve Bank of Chicago Chief Executive Charles Evans said Tuesday.
After speaking to the City Club of Chicago, Evans met with reporters and was asked how comfortable he felt about the likelihood of two interest rate hikes this year.
Evans had pointed out that the median of the projections was for two rate hikes and that he was "comfortable" with that prediction -- on the condition that gross domestic product grows by 2 percent to 2.5 percent and that unemployment falls from its current 4.9 percent to a range of 4.7 to 4.8 percent.
"Fundamentals are good for the economy," he said during his speech. He noted, however, that past recoveries saw GDP growth of 3.5 percent.
Late last year, as the central bank raised its key interest rate from a record low near zero in December, some predicted as many as four modest increases in the Fed's benchmark short-term rate during 2016.
"Currently, given my assessment, two rate increases is not at all unreasonable," Evans said after his speech. "My projection would have two more this year on the basis of the outlook."
byerak@tribpub.com
