Fed official expects U.S. economy to grow 2.5% this year
While the Fed's new 2.5-percent inflation threshold "allows for inflation at times to run modestly above" the Fed's 2-percent goal, it in fact acts as a safeguard against overheating, he said.
The U.S. economy grew at a 3.1 percent annual rate in the third quarter, but growth is expected to have slowed in the final months of the year. Last month, Fed policymakers said they expected GDP growth of between 2.3 to 3.0 percent this year, and 3.0 to 3.5 percent in 2014.
Meanwhile, most expect inflation to run a bit below the Fed's 2-percent target.
U.S. lawmakers on Jan. 1 struck a partial deal that avoids the worst of planned tax rises known as the "fiscal cliff," but put off big decisions on spending cuts for two more months.
Evans said the effects of fiscal policy on U.S. growth are so far about what he had expected when making his growth forecasts late last year.
But he cautioned lawmakers on taking overly aggressive steps to cut back spending.
"The United States must consolidate its public sector finances; but it must do so gradually if we are to avoid further economic turmoil or another downturn," Evans said.
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