Charles Evans says Federal Reserve might have to aim for inflation above 2%

The Federal Reserve might have to aim for inflation above 2 per cent to achieve its 2 per cent target, a top policymaker at the central bank said on Friday.

“We had too many undershoots for quite some time. We’re symmetric and that means even if it’s going to go back up to 2 (per cent), because it's unsure, maybe we should aim for 2.25 per cent to get to 2 per cent,” Federal Reserve Bank of Chicago President Charles Evans said in Stockholm.

The US Federal Reserve held interest rates steady on Wednesday and signaled little appetite to adjust them any time soon, taking heart in continued job gains and economic growth and the likelihood that weak inflation will edge higher.