CHICAGO (Reuters) - Chicago Federal Reserve Bank President Charles Evans on Friday said the narrow gap between long-term and short-term borrowing costs, sometimes seen as a warning of a slowdown ahead, is not a matter of particular concern to him.
“The yield curve is not nearly as much of a concern as I might have pointed to a couple months ago,” he told reporters after a talk at the Graaskamp Center Spring Board Conference in Chicago. “We’ve got more fiscal debt in train in the U.S. That has to be funded,” and will likely push up long rates and steepen the yield curve, he said.
Removing monetary policy accommodation is a “natural response” to fiscal stimulus and the strength of the international economy, he said, though it may also be the yield curve will be flatter in the future than it has been historically.
Reporting by Tom Polansek, writing by Ann Saphir; Editing by Jonathan Oatis