CNBC EXCLUSIVE: CNBC EXCERPTS: CNBC'S STEVE LIESMAN SITS DOWN WITH CHICAGO FEDERAL RESERVE PRESIDENT CHARLES EVANS TODAY ON "SQUAWK BOX"
WHEN: TODAY, TUESDAY, AUGUST 30TH
WHERE: CNBC'S "SQUAWK BOX"
Following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with Chicago Federal Reserve President Charles Evans today on CNBC's "Squawk Box." All references must be sourced to CNBC.
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Chicago Fed: Economy in Liquidity Trap
The current economic situation is disappointing, says Charles Evans, Federal Reserve Bank of Chicago, who explains that the job market is tough to characterize as recession-like but the economy is moving sideways; with CNBC's Steve Liesman.
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Chicago Fed Pres: Monetary Policy Criticized
Bank regulations currently in place have been a good tool to prevent a credit policy whereas monetary policy isn't the only effort to supervise banks, says Charles Evans, Federal Reserve Bank of Chicago. He says the Fed is criticized because monetary policy isn't effective enough to do anything but on the other hand it is effective enough to push oil prices to $100; with CNBC's Steve Liesman.
EVANS ON THE ECONOMIC RECOVERY:
"I AM SOMEWHAT NERVOUS ABOUT THE ECONOMIC RECOVERY AND WHERE WE STAND AT THIS POINT 2 YEARS AFTER WE BOTTOMED OUT THE 1ST HALF OF THIS YEAR GOT REVISED DOWN AND WE HAD VERY WEAK GROWTH IT WAS ABOUT .7% ON AN ANNUALIZED WE HAD BEEN HOPING TO ACHIEVE SOMETHING MUCH MORE LIKE A LAUNCH OR ESCAPE VELOCITY."
EVANS ON THE LABOR MARKET:
"IT IS DIFFICULT TO CHARACTERIZE THE LABOR MARKET AS ANYTHING BUT BEING CONSISTENT WITH BEING IN A RECESSION, AT 9.1% UNEMPLOYMENT IT IS VERY MUCH OF A CONCERN TO ME. EMPLOYMENT GROWTH HAS BEEN VERY WEAK. THE ECONOMY IS GROWING BUT IT IS A VERY SMALL POSITIVE WE HAVE REALLY BEEN GOING SIDEWAYS MORE THAN ANYTHING ELSE."
EVANS ON THE U.S. NOT BEING IN A RECESSION:
"WE ARE NOT TECHNICALLY IN A RECESSION WE HAVE SEEN GROWTH AND MOST RECENT GROWTH HAS BEEN POSITIVE BUT WE ARE MOVING SIDEWAYS MORE THAN ANYTHING ELSE AND I THINK WE ARE KIDDING OURSELVES UNLESS WE LOOK AT THE LABOR MARKET AND SAY YOU KNOW THIS IS NOT A GOOD SITUATION."
EVANS ON THE ECONOMY BEING IN A LIQUIDITY TRAP:
"I THINK THE ECONOMY IS REALLY IN A BIT OF A LIQUIDITY TRAP, INTEREST RATES ARE AT 0% FOR POLICY RATES AND EVERYTHING ELSE EQUAL WE REALLY NEED A LOWER REAL INTEREST RATE IN ORDER TO EQUILIBRATE SAVINGS AND INVESTMENTS."
EVANS ON CLEARER ECONOMIC MARKERS:
"I FAVOR BEING MUCH CLEARER AND SPECIFIC ABOUT THE ECONOMIC MARKERS THAT IT WOULD TAKE TO ALTER THAT WHAT I WOULD PREFER AND IN FACT I ARGUE FOR SOMETHING LIKE THIS JUST RECENTLY IS TO SAY THAT WE COULD ALLOW RATES TO REMAIN LOW UNTIL THE UNEMPLOYMENT RATE FELL TO A CERTAIN LEVEL OR IF INFLATION BECAME TREMENDOUSLY UNACCEPTABLE AT A HIGHER RATE."
EVANS BEING ACCOMMODATING:
"AT THE END OF THE DAY I AM VERY LIKELY TO FOLLOW THE CHAIRMAN'S LEADERSHIP BUT IT IS MY ROLE TO OFFER A PARTICULAR TYPE OF ADVICE THAT MAYBE THE DUAL MANDATE TELLS US THAT WE NEED TO BE MORE ACCOMMODATING THAN WE HAVE BEEN"
EVANS ON BENCHMARK:
THE FEDERAL RESERVE HAS A DUAL MANDATE. THE FEDERAL RESERVE ACT INSTRUCTS US TO MAINTAIN MONETARY AND FINANCIAL CONDITIONS TO PROMOTE MAXIMUM EMPLOYMENT AND PRICE STABILITY. WE LARGELY -- THE OBJECTIVE FOR INFLATION IS ABOUT TWO PERCENT...WE'VE ALREADY EXPERIENCED 1%. WE OUGHT TO BE SYMMETRIC IN OUR ATTITUDES. AND SO IF 1% IS NOT A CATASTROPHE -- 3% IS NOT A CATASTROPHE.
EVANS ON COMMODITY PRICES NOT BEING LINKED TO MONETARY POLICY:
THE FACT THAT OIL PRICES AND COMMODITY PRICES AND FOOD PRICES HAVE MOVED DOWN SOMEWHAT YES OF COURSE THAT IS A GOOD THING FOR CONSUMERS BUT TO LINK THAT TO MONETARY POLICY, WE SHOULD STILL HAVE THOSE INFLUENCES ON COMMODITY PRICES BUT WE HAVEN'T AND THAT IS WHY I SAY THAT MONETARY POLICY IS UNLIKELY TO BE A CONTRIBUTOR TO THAT."
EVANS ON MONETARY POLICY BEING A BLUNT TOOL:
"MONETARY POLICY IS A VERY BLUNT TOOL IT IS ONLY ONE TOOL AND WHEN YOU HAVE MULTIPLE OBJECTIVES YOU CAN'T ACHIEVE EVERYTHING THAT YOU NEED."
EVANS ON CHINA AND INDIA:
"I THINK THAT IT IS VERY SURPRISING THAT ANYBODY COULD CHARACTERIZE THE INCREASE IN COMMODITY PRICES AS DUE TO A BIT OF ADDITIONAL ACCOMMODATION THAT THE FED SUPPLIED, WHEN YOU LOOK AT CHINA AND INDIA, EMERGING MARKETS OVER A BILLION PEOPLE ARE COMING ON LINE AND PUTTING PRESSURE ON SCARCE RESOURCES, THEY ARE BUILDING THEIR INFRASTRUCTURE IN CHINA, THAT IS OBVIOUSLY PUTTING TREMENDOUS PRESSURE ON COMMODITIES AND ENERGY IN A WAY THAT SMALL MOVEMENTS IN MONETARY POLICY COULD NOT EVEN POSSIBLY HAVE THAT EFFECT."