(Reuters) - The U.S. economy is solid and interest rates have been in the right place, but policymakers need to keep an eye on potentially weak inflation and uncertainty over trade conflicts, Chicago Federal Reserve President Charles Evans said on Tuesday.
"Our current setting has been appropriate, but if we sense that there was some greater uncertainty, some softening, we'd have to take that into account and ask, are we getting in the way of the economy," Evans told CNBC. "I don't see it that way at the moment."
Evans said markets, which are betting the Fed will have to deliver rate cuts this year, may be seeing "something that I haven't yet seen in the national data."
Business investment is not as strong as he would like, potentially due to uncertainty over trade or other issues, but consumers and the jobs market continue to be solid, Evans said.
Eventually, he said, the Fed may need to be more aggressive in responding to inflation falling too far below its 2% target.
Evans' comments come a day after St. Louis Federal Reserve President James Bullard said that a rate cut may be needed "soon," the strongest signal yet that the central bank may change course as trade tensions threaten the U.S. economy.
Since the Fed's rate-setting committee last met, President Donald Trump has slapped new 25 percent tariffs on $200 billion of Chinese imports, taken aim at Chinese telecoms giant Huawei and threatened new tariffs on goods from Mexico.