Fed's Evans: After Weak First Quarter, No Rate Hike Until 2016

(RTTNews) - Federal Reserve Bank of Chicago President Charles Evans is reluctant to raise interest rates after data confirmed the economy hit a rough patch for the second winter in a row.

"Economic activity appears to be on a solid, sustainable growth path, which, on its own, would support a rate hike soon," Evans said in remarks prepared for a speech Monday in Columbus, Indiana.

"However, the weak first-quarter data do give me pause, and I would like to see confirmation that they are indeed a transitory aberration," he added. "I likely will not feel confident enough to begin to raise rates until early next year."

US GDP inched up by just 0.2 percent in the first quarter following the 2.2 percent growth seen in the fourth quarter. The modest uptick compared to economist estimates for an increase of about 1.0 percent.

Evans remarks should come as little surprise to Fed watchers, as he has been among the more vocal doves among policy makers.

"It goes without saying that we need to see continued improvements in labor markets and solid GDP growth," Evans said. "Even though we have made great strides, the economy has not yet returned to full employment, and we must be confident that growth will be adequate to get there."

Earlier this year he expressed concerns that inflation will not rise to the Fed's target level of 2 percent until 2018, therefore he sees no need to raise interest rates at this time.