Fed Evans toys with idea of low rates until jobless down to 5.5 pct

DAYTON, Ohio, April 4 Thu Apr 4, 2013 9:33am EDT

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DAYTON, Ohio, April 4 (Reuters) - Charles Evans, head of the Federal Reserve Bank of Chicago, said on Thursday the U.S. central bank could possibly keep interest rates near zero until unemployment falls to 5.5 percent as long as inflation remains lower than desired in the future.

If inflation continues to underrun the Fed's official 2-percent target, "that's something that could possibly come about," Evans said at the University of Dayton's RISE student investment forum.

The Fed has said it will keep rates near zero until unemployment, now at 7.7 percent, falls to 6.5 percent, as long as inflation expectations do not rise to 2.5 percent.

Evans's dovish colleague, Narayana Kocherlakota of the Minneapolis Fed, has pitched a plan to lower that threshold to 5.5 percent joblessness.

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