By Ann Saphir

(Reuters) – The Federal Reserve must raise interest rates in this and the next year to reduce high inflation, Chicago Fed President Charles Evans stated on Thursday.

Evans said that “Monetary Policy must shift towards removing accommodation within a timely fashion.” He made the remarks in remarks for the Detroit Regional Chamber. Evans noted that the U.S. central banks interest rate rise last week was only one of the many this year.

Evans claimed that while the U.S. economy is gaining momentum, some labor markets are “downright tight”, and that rapidly rising inflation caused by pandemics has now spread across the country.

Evans stated that this is an indication of greater general pressures from aggregate demand and today’s impinged supplies. Evans stated that if monetary policy failed to respond to the broader pressures we might see inflation expectations rise and inflation becomes more embedded. We would need to work harder to contain it.

The U.S. labor market was tighter than ever, according to data released Thursday by the Labor Department. New filings for unemployment benefits fell last week to their lowest point since September 1969. The prior week saw the lowest number of jobless claimants continuing to receive benefits for the first time since January 1970. This was when America’s labor force was about half its size today.

Fed policymakers as a group signaled last week they expect to raise the benchmark overnight interest rate by the equivalent of seven quarter-percentage-point rate hikes this year and three more times next year, a view Evans said on Thursday that he shares.

He said that these actions along with a reduction in the Fed’s balance sheet will bring inflation closer to the central banks 2% target for the next few years. At the moment, inflation by Fed is at around 6%.

Evans said that much remains in doubt, especially with the Ukraine crisis, and pandemic, which pose unknown upside risks for inflation as well as downside risks for economic growth.

Evans explained that policymakers should be prudent, humble and nimble in order to navigate the path ahead. Evans stated that “Monetary policies are not set in stone” and will be determined at Fed meetings, taking into consideration economic data, financial conditions, as well as risks.