in the 1970s and 1980s federal reserve policy often caused recessions to get inflation down it might not have to take such draconian steps this time said chicago fed president charles evans on friday in this cycle inflation gains have been largely driven by unusual supplyside developments related to the covid19 shock and underlying inflation remains contained evans said in remarks to the us monetary policy forum organized by the chicago booth initiative on global markets “so—unlike in the volker and greenspan eras—no extra monetary restraint is needed to bring trend inflation down” evans said evans is not a voting member of the fed’s interestrate committee this year he has been the president of the chicago fed since 2007 making him the longest service fed regional president a longtime proponent of allowing the economy to run hot evans made fun of himself saying that his remarks were “typical evans dovishness” despite this stance evans said he agreed that the fed has to start raising interest rates this year given the high inflation readings “i agree the current stance of monetary policy is wrongfooted and needs substantial adjustment” he said in his remarks evans focused on how high interest rates may have to go at the moment the fed’s policy rate is close to zero by its own estimation the fed will have to get its policy rate up to 25 before it is “neutral” – neither boosting growth or restraining demand it is the decision to go beyond neutral which would restrain demand and thus potentially causing a recession – that former fed chairs volker and greenspan both made they were facing rising cyclical inflation and underlying inflation evans said their “twofisted restrictiveness led to recessions and high unemployment—sometimes intentionally and sometimes because the already moderating economy was subsequently hit by unexpected shocks” evans said that is not the case this year he added the fact that the “relative” price gains were caused by covid “may be different from more typical cyclical inflation episodes furthermore by my reading underlying inflation appears to still be well anchored at levels consistent with the fed’s average 2 percent objective and so—unlike in the volker and greenspan eras—no extra monetary restraint is needed to bring trend inflation down” evans said “so i see our current policy situation as likely requiring less ultimate financial restrictiveness compared with past episodes and posing a smaller risk to the employment mandate than many times in the past” evans added the fed will watch the inflation picture closely evans said if there are signs that cyclical inflation is bleeding into underlying inflation than a more restrictive policy may be warranted he said after moving above 2 this month the yield on the 10year treasury note tmubmusd10y has fallen below 195 on fears of a looming russian invasion of ukraine