More aggressive Fed could benefit economy: Evans

CARMEL, Indiana (Reuters) - The economy could improve one to two years earlier than it otherwise would if the Federal Reserve behaves "very aggressively," including possibly making additional asset purchases, a top Fed official said on Friday.

The central bank should make the purchases if the labor market does not make sufficient progress quickly enough, Chicago Federal Reserve President Charles Evans told reporters, adding that mortgage-related securities would be a "perfectly fine" option.

"If we behave very aggressively, I think we could find improved economic performance one or two years faster than what we might ultimately be seeing if we don't take those actions," he told reporters on the sidelines of an Indiana Bankers Association meeting.

"We want to make sure we have enough accommodation in there so that we give it a chance," Evans earlier told the crowd.

The comments from Evans - perhaps the most dovish of Fed policymakers, focused more on reeling in high unemployment than containing inflation - could amplify the debate over whether to provide more help to the economy, going into the central bank's first meeting of the year on January 24-25.

The Fed in late 2008 slashed interest rates to near zero and has since bought $2.3 trillion in long-term securities in an unprecedented drive to spur growth and revive the economy after the worst recession in decades.

The purchases included mortage-backed securities.

Though recent data suggest the rebound gained traction, including a drop in the unemployment rate to 8.5 percent last month, the slow overall recovery has cast some doubt on the effectiveness of the central bank's strategy.

Evans, who does not have a vote on the Fed's policy-setting committee, said he was worried the recent labor market improvement could be "transitory" and that unemployment could even rise slightly in the next few months.

Some Fed officials favor more accommodation while others are against it. Last year, officials dissented against policy decisions both because they were too aggressive and, in the case of Evans, not aggressive enough.

(Reporting by Jonathan Spicer; Editing by Padraic Cassidy)