Fed's Evans says he's 'uneasy' about too little inflation

Yahoo Finance's Brian Cheung discusses Chicago Fed President Charles Evans' stance on inflation, along with Boston Fed President Eric Rosengren's retirement plans.

Video Transcript

ZACK GUZMAN: Some interesting headlines out of the Fed when it comes to changes there. As we've discussed, there has been a bit of controversy when it comes to disclosures around trading. Some people taking notice of that. And now, perhaps, potentially related to that, Boston Fed President, Eric Rosengren, pulling forward his planned retirement up by about nine months saying that he will retire on September 30, disclosing a health condition.

You don't necessarily want to connect the dots there directly, but the backstory there is, of course, controversy over investments that he had made in real estate investment trusts and the like, along with some other Fed officials. So here for more on that, Yahoo Finance's Fed reporter, Brian Cheung, joins us now. And Brian, I mean, it was planned so this is something that a lot of people had expected, just maybe not this soon.

BRIAN CHEUNG: Right. Well, his term as the head of the Federal Reserve Bank of Boston, again, Eric Rosengren, was supposed to be in June of next year. But as you mentioned, the announcement coming out just this morning around 8:30 that he will retire effective September 30 this week, which would be pulling forward that plan by about nine months.

And he said for the first time that he has a kidney condition that apparently worsened during the pandemic. He said he doesn't want to delay the need for a dialysis. And for that reason, that's why he's going to be stepping down this week. But all of this coming only a few weeks after that "Wall Street Journal" report revealing that the Boston Fed President-- or rather, a "Bloomberg" report that said the Boston Fed President had made a number of transactions in real estate investment trusts during 2020.

This is during the same time period that he was warning about the possible negative impacts of the COVID crisis on the real estate sector. So the optics of that were something that prompted the Boston Fed President to after the fact say that he was going to close his accounts and that he was going to sell all those positions by the end of this month.

He also committed to not doing any more stock trading while he was serving as the president of the Boston Fed. Obviously, now that not going as relevant with him retiring effective this week in his place, Ken Montgomery, who's the current COO of the Boston Fed will be taking his place.

But, of course, no word yet on the other Fed president that has been closely watched with regards to a trading, that being the Dallas Fed president, Robert Kaplan, who made a number of multimillion dollar transactions. We haven't heard any word from him, although his scheduled retirement wasn't supposed to be taking place for a number of years. We'll see if the Dallas Fed has any updates on that, Zack.

ZACK GUZMAN: Yeah. Of course it sparked a bit of controversy there, as even Jay Powell weighed in on it in the last presser as you were covering it for us there, looking at rules and disclosures around that, how it can be improved. Beyond just that though, Brian, we are kind of listening to updated Fed speak. This time, Chicago Reserve President, Charlie Evans, talking about inflation.

We've been talking about inflation for a while. But this time, he's on the other side saying that he's uneasy about not seeing the levels of inflation he'd be comfortable with once more in 2023 and '24. I suppose it's looking a little bit down the line, but different than the issues we've been talking about recently.

BRIAN CHEUNG: Well Zack, I think not just Fed officials, but everyone will be talking about inflation, even through 2023 or 2024. As you mentioned, we're starting to get this commentary from Fed officials that are climbing out of that blackout period out of last week's meeting where the Fed held interest rates steady, but signaled that a tapering of its asset purchases could begin as early as the Fed's next meeting in early November.

But I want to read you this quote from his appearance at the NAB earlier this morning. The Chicago Fed president saying, quote, "I'm more uneasy about us not generating enough inflation in 2023 and 2024 than the possibility that we will be living with too much." A pretty strong statement there for a lot of Americans that are seeing prices across the board go up.

But this underscores how Evans, who's largely seen to be someone in the more center of the Federal Reserve open Market Committee, that policy-setting committee, of the transitory view that even though price pressures are even greater than they had expected with the supply chain disruptions and bottlenecks and base effects of 2021, they still feel like inflation will be coming back down.

So by him saying I think inflationary pressures won't be all that bad in 2023 and 2024 might be trying to send a signal to markets to say don't freak out about runaway inflation. But, of course, we'll see if the tape backs that up as we continue to see these CPI and PCE numbers over the next few years, Zack.

ZACK GUZMAN: All right. Brian Cheung bringing us the latest there on the Fed beat. Appreciate that.

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