Chicago Federal Reserve President and voting FOMC (Federal Open Market Committee) member Charles Evans said that the US central bank is ready to act to support the economy as the government struggles with its fiscal policy and politicians on both sides of the aisle attempt to agree on spending cuts and reach an agreement on the country's debt ceiling.

"Given more explicit conditionality, markets can be more confident that we will provide the monetary accommodation necessary to close the large resource gaps that currently exist," Evans said on Monday at the Asian Financial Forum in Hong Kong.

He repeated that the Fed was committed to helping the labour market and reiterated that expectations are for interest rates to remain low until probably mid-2015.

According to the Chicago Fed president, the winding down of the Fed's quantitative easing programmes is dependent on job creation and continues to wait to see a "substantial improvement" in the labour markets which he defined as "on the order of one million to 1.5 million jobs over the next six months to a year. That would be indicative that we could stop."

Currently, Evans forecasts that US unemployment will be 7.4% this year and drop to about 7% in 2014. He noted that he expects the Fed to keep rates near zero until the unemployment rate drops to 6.5% as long as inflation expectations do not move beyond 2.5%.

Furthermore, Evans expects the US economy to grow 2.5% in 2013 and improve to 3.5% growth for 2014.

JM

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