The President of the Chicago Fed, Charles Evans has taken a relatively softer stance compared to his colleague, the New York Fed President William Dudley, who painted an upbeat outlook with regard to the economy and inflation. In a prepared speech before the Money Marketeers of New York University, Mr. Evans said that he sees no reason to why the policymakers should not wait it out for inflation to edge higher before increasing rates further. He suggested waiting until the year end to decide whether to hike rates or not. Pointing to the recent slowdown in inflation he said, "I don't see why we would not be served to allow more time to wait".

While he said that he doesn’t want to get into the debate of two, three or four rate hikes in 2017, he believes that the current environment supports very gradual rate hikes and a slow preset reduction in the balance sheet. He added that while the Federal Reserve has achieved its goal of full employment, the inflation remains a serious policy miss. While unemployment in the United States declined to just 4.3 percent, inflation stripping the effect food and energy declined to just 1.5 percent in April this year.

The U.S. Federal Reserve has hiked interest rate twice already this year in March and in June and has also unveiled plans to reduce its balance sheet beginning later this year. Fed will start the trimming by reducing reinvestments in the tune of $10 billion per month, which would gradually rise to $60 billion with an increment of $10 billion every 3 months.