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"That to me suggests we have time before we need to adjust
rates," Minneapolis Fed President Neel Kashkari told reporters
after a symposium on banking regulation at his bank's
headquarters.
Fed policymakers voted 7-3 on Sept 21 to hold steady the target
rate for overnight lending between banks at 0.25 percent to 0.5
percent. Kashkari currently participates in Fed policy
discussions as a non-voter, but rotates next year into a voting
role.
"I do think that was the right move. I supported the decision in
the meeting," Kashkari said. "It seems to me that the risks of
too low inflation are greater than the risks of too high
inflation."
Unemployment registered 4.9 percent in August, below what many
economists view as sustainable in the long run, and most Fed
officials expect it to fall further.
Inflation has run well below the Fed's 2 percent target for four
years.
Kashkari said he does not consider himself either a monetary
policy dove with a preference for lower rates or a hawk who
leans toward higher rates.
Instead, he said, he watches inflation, inflation expectations,
and the unemployment rate for clues on the optimal setting for
interest rates.
"If the data changes and inflation moves up, or inflation
expectations move up, or we see either the headline unemployment
rate drop quickly or we have some confidence that the slack in
the labor market has been used up, that would then suggest to
me, okay now it’s time to get going," Kashkari said. "Then I
might be aligned with the hawks."
(Reporting by Ann Saphir; Editing by Meredith Mazzilli and David
Gregorio)
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