Minneapolis Federal Reserve Bank President Neel Kashkari on Monday signaled his support for the cautious and patient approach to rate hikes laid out by Fed Chair Janet Yellen, saying the current stance of monetary policy is “about right.”
While a rate hike in June is “possible,” Kashkari sounded happy to keep rates low for now in order to continue bringing workers who have not worked in months or years back into the labor force.
“To me, just looking at the raw data, it says we should be accommodative, and I think we have this other societal need that we should be accommodative, because if we can keep people from being lost permanently, boy that’s a real positive for society,” Kashkari said in an interview in his bank’s cafeteria overlooking the Mississippi River.
Kashkari said the U.S. economy is likely to grow at about a 2-percent pace this year.
He said it was not clear whether a recent pick-up in inflation was “real” or due to transitory factors.
Until there is good evidence inflation is moving toward the Fed’s 2-percent target, “I feel like we have the luxury of allowing the labor market to continue to bring people back into the workforce,” Kashkari said.
At the same, Kashkari did not rule out the possibility that wages, the unemployment rate, labor force participation and the inflation outlook could improve enough before June for the Fed to raise rates then.
“It’s possible,” Kashkari said. “I don’t want to prejudge.”
Kashkari has been an outspoken critic of the Fed’s and other regulators’ approaches to overseeing big banks, saying they don’t go far enough to prevent future bailouts.
Kashkari’s first detailed remarks on monetary policy since becoming president of the Minneapolis Fed in January, however, signal the former Republican candidate for California governor backs Obama-appointed Yellen fully on the interest-rate front. Presumptive Republican presidential nominee Donald Trump said he probably would replace Yellen when her term is up in early 2018.
“I am not going to comment on any of the presidential candidates or their policy proposals, other than to say I think Chair Yellen is doing a terrific job and whoever the next president is should reappoint her,” Kashkari said.