U.S. Fed official calls for continued accommodative policy

Federal Reserve Bank of Chicago President Charles Evans said on Tuesday that the U.S. central bank should continue to use an accommodative policy until the country's unemployment rate falls below 7 percent, if the current policy is not boosting the economy enough. Speaking at the Council on Foreign Relations in New York, Evans, a voting member of the Fed's decision-making committee, saw potentials for the central bank to purchase more assets, especially the mortgage-backed securities included in the accommodative policy. "Applying this trigger threshold risk management approach to our current economic situation is really just an embodiment of what I see as our broader flexible inflation targeting framework," said Evans. He believed that an inflation up to 3 percent would be acceptable. The U.S. unemployment rate now stands at 9 percent, far above the Fed's objective. "In my opinion, the inflation safeguard threshold needs to be substantially above our 2-percent inflation objective, say 3 percent," Evan said. His top concern for now was the European debt crisis, which he said "will be disruptive for the world economy." But he thought the euro will survive because of the tremendous commitment to keeping it.