Evans to suceed Moskow as Fed president
For the last four years Charles Evans, known in financial circles as the Chicago Fed's influential research whiz, remained in the background at Federal Open Market Committee meetings in Washington.
Now the Federal Reserve Bank's committee will be clearing a seat for him at the big table as Evans on Monday was named the next president of the Federal Reserve Bank of Chicago.
He will replace longtime President Michael Moskow, 69, who retires Aug. 31. Moskow is viewed by some Fed watchers as a hawk on interest rates but who never dissented from board rulings. Evans, 49, was his chief economic adviser.
Evans will vote on U.S. interest rate policy at the final three Federal Open Market Committee meetings this year.
"He will be the point man for Chicago on that board," said Thomas Mondschean, professor of economics at DePaul University.
One of his top challenges will be administrative, Mondschean said. The popularity of online checking is putting pressure on the Federal Reserves' check clearing operations, resulting in significant layoffs. Pressure also is rising for the Federal Reserve to toughen lending standards to head off future sub-prime mortgage problems.
Evans, a Glen Ellyn resident, said in an interview that he has worked closely with Moskow in recent years, and he did not signal radical changes ahead.
"I feel very comfortable with our bank and our strategic direction," Evans said.
Evans steps in at a time when some in the financial markets anticipate a Fed interest rate cut in response to a credit-market crunch and stagnant housing market.
He declined to talk about specific policies, such as targeting specific rates of inflation by manipulating interest rates, but he did indicate a firm view on inflation.
"Price stability is very important," Evans said.
He joined the Chicago Fed in 1991 and headed research since 2003.
Evans' research has been published in several economic journals. His most recent paper, updated in late 2006, was about macroeconomic shocks and variability in the nominal Treasury yield curve.
As a macro-economist, Evans' training aligns better with Federal Reserve Chairman Ben Bernanke, also a macro-economist, according to George Kaufman, the John Smith Professor of Finance and Banking at Loyola University in Chicago. Moskow's background is in labor and trade economics.
"He might become more of a player on the board," Kaufman said. "Bernanke relies more on the macro-economic research."
Evans agreed his training may help him.
"I have done research that was very much related to work Mr. Bernanke did back in his Princeton days," Evans said.
Kaufman, who knows both Evans and Moskow, said Moskow spent his early years speaking "Federal reserveeze," which is speaking but giving no relevant information. In recent years, Kaufman said, Moskow became more of a national figure as he became more specific about inflationary dangers.
"That may have been Charlie's influence," said Kaufman, pointing out Evans rose to chief economic adviser during that period.
Evans said changes ahead at the Chicago Fed will be driven by demographic and technology changes. Aging Baby Boomers and immigration will change the work force. Technology is influencing productivity and checking habits.
The presidents of the 12 regional Federal Reserve banks rotate for voting seats. The Chicago Fed president votes on the Fed's policy every two years in a rotation with Cleveland. The Chicago Fed district includes northern Illinois and Indiana, southern Wisconsin, Iowa and most of Michigan.
A Chicago Fed board committee conducted a months-long search before turning to an internal candidate to become the bank's ninth president.
"After a comprehensive search in which we interviewed several excellent candidates, we decided that Charlie is best qualified," said Miles White, chief executive of unincorporated Libertyville Township-based Abbott Laboratories and chairman of the Chicago Fed's board.