Fed’s Kashkari Says US Economy Falling Short on Jobs and Inflation

Minneapolis Federal Reserve Bank President Neel Kashkari, the lone dissenter against the U.S. central bank’s decision this week to raise interest rates, said on Friday the U.S. economy is still falling short on employment and inflation.

Even after the data support tightening, Kashkari said in a statement, the Fed should wait on raising interest rates until it publishes a detailed plan for how and when it will reduce its $4.5 trillion balance sheet.



“The announcement of our balance sheet plan could trigger somewhat tighter monetary conditions,” Kashkari said, resulting in the equivalent of a rate hike of unknown size. “After it has been published and the market response is understood, we can return to using the federal funds rate as our primary policy tool, with the balance sheet normalization under way in the background.”

Kashkari’s approach appears to differ sharply from the one embraced by Fed Chair Janet Yellen and the majority of her fellow policymakers, who want to wait on any reductions in the balance sheet until they have lifted rates well away from zero.

via Kitco

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza