Chicago Federal Reserve Bank President Charles Evans looks on during the Global Interdependence Center Members Delegation Event in Mexico City, Mexico, February 27, 2020.
Chicago Federal Reserve Bank President Charles Evans looks on during the Global Interdependence Center Members Delegation Event in Mexico City, Mexico, February 27, 2020. Reuters / Edgard Garrido

Federal Reserve Bank of Chicago President Charles Evans on Wednesday said "extremely" high inflation poses "quite a risk" to economic growth, and the U.S. central bank needs to start raising rates to address it.

"We are going to get going," on raising rates over the next several meetings, going carefully at first, but raising them faster if the inflation outlook worsens, Evans told the Lake Forest-Lake Bluff Rotary Club Foundation.

The Fed will also likely start reducing its balance sheet by the middle of this year, he said.

Even as the Fed withdraws support, inflation likely won't come down quickly, Evans said, remaining above 3% this year, falling closer to 2.5% next year and taking until 2024 to get down to the Fed's 2% target.

Despite the rising rates, he said, the labor market is strong enough now that it will likely remain vibrant.

Earlier Wednesday Fed Chair Jerome Powell told Congress the Fed plans to raise interest rates this month, despite the "highly uncertain" economic impact of Russia's invasion of Ukraine.

Evans also said the geopolitical situation creates complication, but at least so far there are few spillovers to the U.S. economy besides higher oil and gas prices.