Fed may not be able to engineer higher inflation -Kashkari
SANTA BARBARA, Calif., May 16 (Reuters) - The Federal
Reserve should not cut interest rates unless there is hard data
signaling economic weakness ahead, Minneapolis Fed President
Neel Kashkari said on Thursday, and should not rely on a rate
cut to try to kickstart a healthier level of inflation.
"I am not sure that cutting rates would do much to inflation
expectations," Kashkari told reporters after giving a talk in
Santa Barbara, California. "It might take some surprise, that
maybe wage growth all of a sudden does pick up, and then that
leads to high inflation, and then importantly we shouldn’t
respond very much, to allow that to go above target."
He added, "I don’t think it’s completely in our control
getting inflation back to 2%."
Kashkari, who does not vote this year on monetary policy,
said that while wages are picking up, it is not enough to
suggest that inflation is on the cusp of a sudden increase. As
long as wage growth remains in check, he asked, "why tap the
brakes" with an interest rate increase?
"We can always raise rates" if wages, and inflation, start
to rise too fast, he said.
(Reporting by Ann Saphir; Editing by Meredith Mazzilli)
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