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Fed's Evans: Inflation to stay low through 2013

Fed's Evans: Inflation to stay low through 2013 (by Greg Robb)

WASHINGTON (MarketWatch) - Inflation is too low and may stay below the Fed's target of 2% growth through the end of 2013, said Charles Evans, the president of the Chicago Fed on Thursday. In a speech to the Chamber of Commerce in Rockford, Illinois, Evans said he realized that his outlook on inflation was an "unpopular" viewpoint. He noted that gasoline costs make up only about 3.6% of the Fed's preferred measure of inflation, the personal consumption expenditure index. "In fact, over 80% of what consumers spend their money on increased at an annual rate of 2% or less over the past three months," Evans said. Recent economic data has been encouraging, but it is important to remember that a 4% GDP annual growth rate would be a "relatively muted recovery." "We still have a long road ahead" to return the economy to full employment, he said. Evans is a voting member of the Fed's interest rate setting Federal Open Market Committee this year.

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Fed's Evans: Inflation to stay low through 2013