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Fed’s Evans is nervous about going too far, too fast with rate hikes

Watch CNBC's full interview with Federal Reserve Bank of Chicago President Charles Evans

Chicago Federal Reserve President Charles Evans says he feels concerned that the U.S. central bank is raising interest rates too quickly in its quest to tackle runaway inflation.

Speaking to CNBC’s “Squawk Box Europe” on Tuesday, Evans said he remains “cautiously optimistic” that the U.S. economy can avoid a recession — assuming there are no more external shocks.

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His comments come shortly after a number of top Fed officials said they would continue to prioritize the fight against inflation, which is currently nearing its highest levels since the early 1980s.

The central bank raised benchmark interest rates by three-quarters of a percentage point earlier this month, the third three-quarter point increase in a row.

Fed officials also indicated that they would continue to raise interest rates well above the current range of 3% to 3.25%.

Asked about investor fears that the Fed didn’t appear to be waiting long enough to assess the impact of the rate hikes, Evans said: “Well, I’m a little nervous about exactly that.”

“There is a lag in monetary policy and we have moved quickly. We have made three 75 basis point increases in a row and there is talk of more to get to the 4.25% to 4.5% by the end of the year, you’re There’s not a lot of time to look at every monthly release,” Evans said.

‘Peak fund rate’

Traders have been concerned that the Fed will remain more hawkish for longer than some expected.

The Fed’s Evans, 64, has consistently been one of the Fed’s policy doves in favor of lower rates and more accommodation. He will retire from his position early next year.

The Fed's Charles Evans says there is concern that global inflation is spreading

“Again, I still think our consensus, the median forecasts, is going to peak the funds rate by March — assuming there are no more negative shocks. And if things get better, we might do less, but I think we’re headed for it highest fund rate,” Evans said.

“It provides a path for employment, you know, stabilization in something that still isn’t a recession, but there could be shocks, there could be other difficulties,” he continued.

“Goodness knows every time I thought that supply chains were going to get better, that we were going to get car production up and used car prices down and housing and all that, something has happened. So, cautiously optimistic.”

— CNBC’s Jeff Cox contributed to this report.

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