Federal Reserve Bank of Minneapolis President Neel Kashkari said the US central bank’s policy stance is restrictive, but policymakers haven’t entirely ruled out additional interest-rate increases.
“I don’t think anybody has totally taken rate increases off the table,” Kashkari said Tuesday at an event in London. “I think the odds of us raising rates are quite low, but I don’t want to take anything off the table.”
Kashkari echoed remarks he made earlier Tuesday, in an interview on CNBC, when he said officials should wait for more evidence that inflation is cooling before cutting interest rates, especially given the strong labor market and resilient economy.
“Wage growth is still quite robust relative to ultimately what we think would be consistent with the 2% inflation target,” he said.
He added, “We have time to assess how much downward pressure we are putting on demand” before making any new policy decisions.
Fed policymakers are widely expected to keep interest rates at a 23-year high when they next meet June 11-12 in Washington.
In the CNBC interview, Kashkari said policymakers should take their time in monitoring whether inflation is slowing enough to warrant interest-rate cuts.
The economy has remained “remarkably resilient” and the labor market continues to be strong — especially in services — Kashkari told CNBC in an interview. While nothing should be ruled out in terms of future policy, the Fed would be well-advised to wait and see, he added.
Kashkari also said:
Resilient: “Most people thought we’d be in a recession toward the end of last year, and that didn’t happen. Instead we had very strong growth. US consumers have remained remarkably resilient, the housing market has remained resilient. So I’m not seeing the need to hurry and do rate cuts. I think we should take our time and get it right.”
Too early: “At the beginning of this year,” inflation “has moved sideways, and that has raised questions in my mind: is the disinflationary process continuing or are we landing to more of a 3% inflation level. I think it’s still too early to know and we need to wait and see to get more confidence.”
Committed: “I don’t think we should rule anything out at this point. we are all committed to getting inflation all the way back to our 2% target.”
Note: Kashkari doesn’t vote on policy this year
