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Fed's Evans says Fed won't follow strict formula for timing liftoff

FILE PHOTO: Chicago Federal Reserve Bank President Charles Evans takes a question during a round table with the media in Shanghai, China March 23, 2010. REUTERS/Nir Elias/

(Reuters) - The U.S. central bank will likely need to keep monetary policy easy for some time after 2023 in order to meet its inflation goal, even once it begins raising interest rates, a top Federal Reserve policymaker suggested on Wednesday.

“We are not going to follow a strict numerical formula to determine the time of liftoff and how long to keep policy accommodative after liftoff,” Chicago Federal Reserve President Charles Evans said in remarks prepared for delivery to the Metals Service Center Institute.

Inflation, he forecast, will return to 2% only by 2023, and the Fed will need to moderately overshoot that level for some time thereafter to achieve its goal of 2% on average, he said.

“Our work on inflation is unlikely to be complete when we first begin to raise rates, and so it also indicates that we will maintain accommodative monetary conditions until our inflation averaging goal is met,” he said.

Evans repeated his view that the economy, while improving, remains weak, and that his forecast for the economy to end the year about 3.5% smaller than it was last year, and to grow at about a 4% pace next year, depends on getting further fiscal stimulus.

Reporting by Ann Saphir; Editing by Andrea Ricci

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