Minneapolis Fed President Neel Kashkari on Friday gave his comments on the U.S. interest rate setting in the short term. According to him, the Federal Reserve (The Fed) should adopt stricter guidelines to return the U.S. economy to full growth. He opined that this should be done by delaying the interest rate hike until core inflation remained at about 2% for about a year.
U.S. central bank earlier this week signaled that they would maintain interest rates in the current range from 0% to 0.25% until the economy reaches maximum employment and inflation rises to 2%.
But the indication can also be interpreted that The Fed can raise interest rates before the economy actually reaches a full workforce as Kashkari said in his protest against the FOMC decision.
He is more inclined to the FOMC to express a stronger commitment not to raise interest rates so that the objective can definitely be achieved. He also stressed that the Fed should not associate interest rates with labor market readings as fears of interest rates being raised at the wrong time could stave off economic recovery.
