Fed's Evans: hiking rates too soon would send U.S. into tailspin

DES MOINES, Iowa (Reuters) - The best way to set the stage for an eventual return to higher interest rates is, paradoxically, to keep rates low for now, a top Federal Reserve official said on Thursday.

If the Fed were to raise rates too soon, "what would happen is the economy would slow and we'd find ourselves in another tailspin," Chicago Federal Reserve Bank President Charles Evans told the CFA Society of Iowa.

Evans said he does not see any upward pressure on inflation from wage increases, and does not expect inflation to rise more than half a percentage point above the Fed's 2 percent target even with the Fed's current easy monetary policy.

It would be a "big mistake" to withdraw the Fed's easy-money policy too soon, he said, as some other central banks, including the Bank of Japan, have done.

(Reporting by Ann Saphir; Editing by Todd Eastham)

Source: http://news.yahoo.com/feds-evans-hiking-rates-too-soon-send-u-035050029--business.html

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