U S president of Chicago Fed to visit China to avoid currency policy or change

Charles Evans, president and chief executive of the Federal Reserve Bank of Chicago, yesterday avoided the renminbi's exchange rate in Beijing on the grounds that the Fed should not be involved in the exchange rate issue at the policy level.　　But at the same time he expressed concern that the U.S. economic recovery has yet to find a suitable engine, so the United States should maintain the existing moderate monetary policy.　　The US economy grew at an annualised rate of 5.9% per cent in the four quarter last year, giving strong support to the global economic recovery, but numerous analyses suggest that the current recovery is almost entirely dominated by inventory investment. The US domestic inventory cycle is about two years old, and inventories ' contribution to growth seems to have peaked. The combination of increased inventories and slower inventory consumption has contributed to a strong growth in the U.S. economy as companies want to please the capital markets to wait until the recovery is real, Evans told the first financial daily.　　In his view, this is only a one-off production growth momentum, in the short term there is unlikely to be another increase in inventory stock, what is the next few quarters of the U.S. economy is the engine of the new problem. Unemployment is still the biggest problem. Over the past more than 10 years, consumption has been the main engine of the American economy, and the economic cycle is basically consistent with the cycle of consumption outbreaks. After the worst of the recession, U.S. consumption fell to 1.7% in the four quarter last year, and the traditional economic engine seems to have warmed up in the first quarter of this year.　　U.S. consumer spending has begun to grow, Evans said, but it has also received several constraints, including a rise in unemployment and a reduction in the share of household assets. Among them, unemployment may be the most troubling of the U.S. economy, the U.S. unemployment rate was still around 10% in the four quarter last year, and research institutions generally are not optimistic about the future unemployment rate.　　Nomura's latest report says the U.S. unemployment rate will remain at 9.8% in the first quarter of this year, and will remain at 9% in the two quarter of 2011. The normal unemployment rate should be around 5%, which is a big distance from now, Evans said.　　Even more troubling is that American workers who have been out of work for more than 6 months are facing problems with labor skills that cannot keep up with their job needs, and the amount of money they can get will be reduced as their ability declines, he says, and that the US unemployment rate will take longer.　　The U.S. economy is growing at 3%~3.5% this year. As for whether investment will continue to drive US growth sharply, Evans believes that investment may only show moderate performance. In the 2009, the U.S. business fixed investment declined more than 1946 years after any year, but many investors observed that a return to business confidence in the four quarter of last year had contributed to a sharp rebound in capital spending, with 40% per cent of respondents planning to increase capital spending in the next 6 months in the four-quarter round table survey.　　This is the highest percentage since the first quarter of 2007. Evans believes that many companies have been saying that they are at the right level of capacity, do not need to continue to expand investment, the existing investment will mainly supplement the original investment caused by a sharp decline in the gap, so the overall investment will appear moderate growthThe US real estate industry is improving, but the vacant state of commercial property is adding to the pressure on small banks.　　In terms of imports and exports, he argues, the changes in U.S. imports and exports are largely dependent on global market responses, and the U.S. economy is expected to grow modestly in 3%~3.5% this year, with the current-account deficit as a barrier to U.S. growth and a rise in savings rates that will benefit the US. Based on the above considerations, the Fed official suggested that the Federal Reserve should maintain its existing loose monetary policy in the next three to four open market meetings over the next 6 months in order to usher in a recovery for the private sector by the end of the year.　　Nomura also said in its report that it would be extremely ironic if US policymakers had made another mistake, namely, premature withdrawal of support policies, which they judged would not happen, but remained concerned. Asked if the US liquidity glut is causing hot money to flood into China, Evans simply said that the excess liquidity in the United States was actually held by banks as reserves.