Fed’s Kashkari: Fed must avoid cutting rates prematurely
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Minneapolis Federal Reserve (Fed) President Neel Kashkari said on Wednesday that the Fed must avoid cutting the policy rate prematurely and having inflation flare up again, as reported by Reuters.
“Appropriate to continue interest rate hikes at least at the next few meetings until confident inflation has peaked.”
“Increasing evidence that inflation may have peaked.”
“Fed should then hold target interest rate and says his forecast is that would be at 5.4%.”
“Won’t know if that is high enough until Fed pauses for a reasonable period of time.”
“Once Fed allows for policy lag effects, can then assess if rates need to go higher or remain at peak for longer.”
“In this phase, any sign of slow progress on lowering inflation will require taking policy rate potentially much higher.”
“Fed can consider cutting rates only when convinced inflation well on its way back down to 2% target.”
The US Dollar Index showed no immediate reaction to these comments and was last seen losing 0.6% on the day at 104.05.
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