(Reuters) – The Federal Reserve’s super-easy monetary policy is giving the U.S. economy the boost it needs to pull free from the effects of the worst recession in decades, a top Fed official said on Tuesday.
“I am optimistic that this is going to be the year that really makes a difference and we start to take off towards the end of this year,” Chicago Federal Reserve President Charles Evans told the Union League Club in downtown Chicago.
If all goes well, he said, “2014 is really the year that we get out of this” and the year should bring “tremendous improvement” in the labor market outlook.
The Fed has held interest rates near zero since December 2008 and has pledged to keep them there until unemployment drops to at least 6.5 percent, as long as inflation does not threaten to rise above 2.5 percent. Unemployment was 7.6 percent in March.
The Fed has also tripled the size of its balance sheet to around $3 trillion through massive bond purchases aimed at holding down longer-term borrowing costs, and has said it will keep up its current monthly purchases of $85 billion in Treasuries and mortgage-backed securities until the labor market outlook improves substantially.
Evans, a voter this year on the Fed’s policy-setting panel, has said that he would want to see job gains of at least 200,000 a month for six months, and above-trend GDP growth, before declaring that milestone to have been met.
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