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Chicago Fed’s Charles Evans cautions on inflation’s hit to small businesses

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Charles Evans, Chicago Federal Reserve President, stated Friday that inflation and increased wages will pose a growing problem for small businesses.

Evans stated to CNBC that even with the February average earnings falling, Evans still heard from smaller businesses in his area about the cost-related challenges.

“I believe there are many business models, particularly for small businesses that will be challenged for future,” the official at the central bank told CNBC’s Steve Liesman in a “briefing” on the topic.Squawk Box” interview. Interview.

Evans made the remarks just minutes after Labor Department’s Bureau of Labor Statistics published that information the economy added 678,000 nonfarm jobsIn February, the number of workers was significantly higher than anticipated. The Wall Street estimates that wages increased by 5.1% in February compared to a year earlier, but this was still lower than what the count showed.

However, that level of yearly growth is still well above the one experienced before the Covid pandemic. Evans stated it would exert considerable pressure. This is the Fed’s preferred inflation gaugeThis shows that inflation, including energy and food prices, has been running at its highest rate since the beginning of 1980s.

“Wages are set to rise.” “If rents go up, gas prices will increase, food costs and margins are getting very thin, there is no way to survive,” he stated. They will have to survive.

Evans favors a more restrictive Fed policy. However, Evans said that inflation had made the current Fed policy of holding benchmark rates near zero “wrong-footed”, even though it is generally supported by Evans.

He will likely be among the largest number of voters this month. to raise rates a quarter-percentage pointKeep doing so.

Evans explained that “Obviously we must be moving towards a more neutral monetary policy certain by the beginning of the year to ensure that we’re in striking distance of adopting a more aggressive approach to inflation.” Evans said, “Wrong-footed” [on policy]It’s a good term. It was very quick.”

The market expects six rate increases of 25 basis points this year. Evans stated that he doesn’t think the Fed should be so aggressive, and the central bank would have a better understanding of its position by the end.

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