Fed's Evans: Need sense of liquidity moves' impact

CHICAGO (Reuters) - Chicago Federal Reserve President Charles Evans said on Friday the U.S. central bank needs a better grasp of how its actions to support financial markets could impact its core goals of promoting sustainable growth and low inflation.

"Are there inflationary implications from swapping liquid Treasury securities for less-liquid assets?" Evans asked rhetorically in remarks prepared for a Swiss National Bank research conference in Zurich.

Evans, who is not a voting member of the Fed's policy-setting Federal Open Market Committee in 2008, did not discuss the economic or monetary policy outlook.

In creating its new lending programs, the Fed has "purposefully sterilized the effects of these facilities on the (federal) funds rate," its primary monetary policy tool, Evans said.

Since the credit crisis erupted in August 2007, "the FOMC's policy decisions have been calibrated in part to avoid an 'adverse feedback loop' between disruptions to financial market stability and the real economy," he added.

Even so, the Fed would benefit from a better understanding of the interaction between its old and new tools, he said.

Current research also falls short of showing how liquidity problems on Wall Street feed back into "consumption and investment decisions of households and businesses," Evans said.

In a week when financial markets have undergone an unprecedented and unrelenting storm, Evans said it was hard to tell when markets might return to a "new normal" and how much the shape of the financial sector might change.

(Reporting by Ros Krasny, Editing by Chizu Nomiyama)