* Evans says two recent rate cuts are appropriate
* Would make further adjustments if needed
* Fed will keep focusing on economy despite criticism fromTrump
* ECB-Vice President says markets are underpricing hardBrexit (Adds quotes and details from the event in Madrid)By Jes??s Aguado and Jose El?-as Rodr?-guezMADRID, Oct 3 (Reuters) - The outlook for the U.S. economyis "quite good", but modest monetary policy adjustments won't beenough to offset potential shocks, Chicago Federal Reserve BankPresident Charles Evans said on Thursday, leaving the door openfor further rate cuts if needed.The Fed has cut rates twice this year as U.S. businesseswere hit by rising trade tensions with China, political riskincluding Britain's potentially chaotic divorce from theEuropean Union, and weakening economic growth in Germany andelsewhere."If there is an event that shocks the world economy or theU.S. economy, these modest adjustments are not going to benearly enough, this is very much just risk management to helpmake things work out better as we strive to bring in growth atabout 2% (in the U.S.) over the next 18 months," Evans told aconference in Madrid."The U.S. economy continues to grow above trend ... U.S.economic outlook is quite good, it still has strongfundamentals," he said, adding though that trade tensions posed
downside risks, potentially putting off investment decisions bycompanies.European Central Bank Vice-President Luis de Guindos said atthe same event that markets may be underpricing the potentialimpact of a no-deal Brexit .
Evans said recent rate cuts by the Fed were appropriate butthe bank would be ready to make further adjustments if needed."We will go to our next meeting, have a discussion aboutwhat's appropriate, and I'm extremely open-minded to making anadjustment if that's what the appropriate policy is," Evanssaid, after also highlighting the recent contraction of the U.S.manufacturing sector as one of the downside risks to growth.A key indicator of U.S. manufacturing fell to its lowestlevel in more than a decade in September as business conditionsdeteriorated further. On Wednesday, Wall Street's main indexes suffered theirsharpest one-day declines in nearly six weeks after employmentand manufacturing data suggested that the U.S.-China trade warwas taking an increasing toll on the U.S. economy.Adding to trade concerns, the United States won approval onWednesday to levy import tariffs on $7.5 billion worth ofEuropean goods over illegal EU subsidies handed to Airbus , threatening to trigger a tit-for-tat transatlantictrade war. EVANS PUSHES BACK AFTER TRUMP'S CRITICISMThe Fed's July and September rate cuts brought the Fed'starget range for overnight borrowing costs to 1.75%-2.00%, belowthe 2.5% that most Fed policymakers view as "neutral" in ahealthy economy.Pushing back against President Donald Trump's calls for theU.S. central bank to slash rates to zero or below, Evans said onThursday presidential communications were different in thisadministration but the Fed would focus on whatever was right forthe economy "no matter who is telling us one way or another.""It is kind of the way it is ... I think Jay Powell has donean extremely good job during his time as (Fed) chair inaddressing the issues we are facing," Evans told journalists onthe sidelines of a financial event in Madrid after assuring thatthe Fed still had a "reasonable amount of independence".
Trump on Tuesday renewed criticism of the U.S. central bank,saying it has kept interest rates "too high" and that a strongdollar was hurting U.S. factories."People get to criticize you ... (but) what we need to do isto keep our head down and pay attention to our mandatedobjective" with regards to employment and inflation, Evans said.
(Reporting by Jes??s Aguado and Jose Elias Rodriguez; Editing byGiles Elgood and Andrea Ricci)