A Federal Reserve official warned Friday that the central bank has seriously missed one of its targets in recent years by keeping inflation too low, suggesting he is not convinced that the Fed is on track to hit its 2 percent inflation target.
Inflation has run below the Fed's 2 percent target over the past eight years, Federal Reserve Bank of Chicago President Charles Evans noted.
"This is a serious policy outcome miss," he said in remarks prepared for a conference in Idaho. Evans didn't make the conference because weather interrupted his travel, but his office released the speech Friday.
Even as inflation has tumbled this year, Fed officials have brushed it off, indicating that they believe that one-off factors are keeping prices low. Those include cellphone service prices cratering because of carriers bidding to offer unlimited data plans. Fed Chairwoman Janet Yellen and others have suggested that inflation is likely to head back up after those temporary price drops slow overall prices.
"My inflation outlook is not quite as sanguine," said Evans, setting himself apart from others at the central bank. He added that the Fed needs to hit the 2 percent target "sooner rather than later."
Evans' comments are the first sign of a Fed official appearing to reconsider plans to continuing raising interest rates this year. Evans is a voting member of the Fed's monetary policy committee. He has voted twice this year to increase rates.
But inflation has continued to move lower, testing the Fed's patience. The Consumer Price Index fell in June to 1.6 percent, the Bureau of Labor Statistics reported Friday.
Fed officials favor rising inflation not for its own sake, but as a sign that the economy is running as well as it could. Predictable 2 percent annual inflation, they believe, allows for businesses and individuals to plan ahead.