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Fed's Evans says labor market weakness pervasive (Reuters)

ARLINGTON, Virginia (Reuters) – Weak U.S. labor markets are likely to justify easy money policies for quite a while longer, a top Federal Reserve official said on Tuesday.

"Labor market issues ... lead me to think this accommodation will likely be appropriate for some time," Chicago Federal Reserve Bank President Charles Evans said in remarks to the National Association for Business Economics.

Recent reports on the jobs market have been mixed, said Evans, who is not a voter on the Fed's policy-setting panel this year. While the path of the unemployment rate conforms to what might normally be expected after a painful recession, there are troubling indicators such as the number of people outside the work force and the length of time workers remain unemployed.

"Once you look past the headline numbers, however, some other labor market indicators are unusually weak," he said.

Evans further said that despite debate over how much slack there is in the economy, high unemployment levels make it undeniable that output is well below the economy's potential.

He also argued that the Fed has taken its extensive purchases of long-term assets, which are scheduled to end this month, as far as has been useful in supporting the economy.

Adding to the Fed's extensive assets would further complicate its exit strategy in the future, he said.

However, he left open the door to further asset purchases if economic conditions change.

The U.S. unemployment rate held steady at 9.7 percent in January, and the Fed -- the U.S. central bank -- is expected to use its policy meeting next week to renew its promise to hold benchmark interest rates exceptionally low for an extended period as long as the jobless rate remains high and inflation tame.

Evans' comments contrast with those of other policy makers who believe the recovery is well-enough established for the Fed to drop that pledge. Kansas City Federal Reserve Bank President Thomas Hoenig, a voter on the Fed's policy-setting Federal Open Market Committee this year, dissented against keeping the language in January.

Another Fed voter, St. Louis Fed President James Bullard, said last week he was losing patience with the extended period language, but stopped short of saying he would vote against maintaining it.

(Reporting by Mark Felsenthal; Editing by Chizu Nomiyama)

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