Fed Official Explains Vote Against Recent Rate Hike
The Federal Reserve has voted to raise interest rates twice already in 2017, but the Federal Reserve Bank of Minneapolis President voted against both, reports Reuters. Federal Open Market Committee (FOMC) member Neel Kashkari told an audience last week that the U.S. central bank should not be raising the federal funds’ target interest rate during a period of low inflation and wages that he says show little sign of an upward surge.
Yellen says economy moving toward target
Federal Reserve Chair Janet Yellen has projected inflation will “necessarily” move toward the central bank’s two-percent target as unemployment sits at a 16-year low. Yellen has reportedly argued that rates need to rise to prevent inflation from “overshooting.”
“What’s the rush?”
“What’s the rush?” Kashkari is said to have remarked during a recent event at Michigan Technological University in Houghton, Michigan. The article reports that Kashkari objected to rate increases approved at March and June FOMC meetings this year.
Kashkari questions efforts to cool economy
“Why are we trying to cool down the economy, when there may still be some slack in the job market, and there is still some room to run on the inflation front?” Kashkari told event attendees. “We’re not seeing wages climb very fast, and we’re not seeing inflation. That tells me the economy is not on the verge of overheating.”
Though the Minneapolis Fed President was outvoted in the latest meeting, the article reports Kashkari continues to make his case. “I don’t see what we are so worried about,” he said.