June 20, 2017 / 3:11 PM / a year ago

Fed's Evans says he's nervous about inflation weakness

WASHINGTON (Reuters) - Chicago Federal Reserve Bank President Charles Evans said on Tuesday he is increasingly concerned that a recent softness in inflation is a sign the U.S. central bank will struggle to get price pressures back to its 2 percent objective.

FILE PHOTO: Chicago Federal Reserve Bank President Charles Evans takes a question during a round table with the media in Shanghai, China March 23, 2010. REUTERS/Nir Elias/File Photo

“I will say that the most recent inflation data made me a little nervous about that. I think it’s much more challenging from here on out,” Evans said in an interview with broadcaster CNBC.

Evans, who is a voter this year on the central bank’s rate-setting committee, said that global forces, not just specific one-off reasons, could be behind a retreat in inflation over the past three months.

In a news conference following the Fed’s decision to raise interest rates last week for the second time in three months, Fed Chair Janet Yellen largely blamed temporary factors for the inflation shortfall.

“In a world of global competition and new technology, I think competition is coming from new places. New partners are choosing to merge and sort of changing the marketplace, and (there’s) more competitive pressure potentially on price margins,” Evans said.

If inflation remains in a slump, the Fed may require a shallower path of rate rises, he added.

The Chicago Fed chief also reiterated his belief that given the lack of clarity on inflation, the central bank could wait until December before deciding whether to raise rates again.

Asked about the timing of the Fed’s plans to begin reducing its balance sheet, Evans said it was “pretty close.”

Reporting by Lindsay Dunsmuir; Editing by Chizu Nomiyama and Dan Grebler

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