Minneapolis Fed President Neel Kashkari said Friday that while the U.S. economy is showing signs of slowing, "it's too soon to call" whether the central bank will raise rates again as it works to tame inflation.
Minneapolis Fed's Kashkari says that 'it's too soon to call' whether interest rates will rise again
The Federal Open Market Committee kept interest rates steady this week.
November 3, 2023 at 7:51PM
"We just have to keep watching the data," Kashkari said at an Economic Club of Minnesota event in Minneapolis, adding wryly, "Just in case you hadn't noticed, our forecasting hasn't been that great in the last few years."
The Federal Open Market Committee, of which Kashkari is a member, opted this week to leave interest rates unchanged at 5.25% to 5.5%. Kashkari had said in September that consumers likely could expect another interest rate hike this year.
At a news conference Wednesday, Fed Chair Jerome Powell did not signal whether the central bank would raise rates again, but noted that Americans continue to suffer the effects of high inflation as monetary policymakers work to reach their 2% target.
"It's painful for people, particularly people who don't have a lot of extra financial resources who are spending most of their income on the essentials of life," Powell said. "The best thing we can do for the U.S. is fully restore price stability and not fail in that task and do it as quickly as possible, but also with the least damage we can."
The U.S. economy has been unexpectedly resilient in the face of rate hikes, which Powell called "a historically unusual and very welcome result." The labor market has been cooling for months, but still added 150,000 jobs in October, according to U.S. Bureau of Labor Statistics data released Friday.
Kashkari on Friday reiterated the acknowledgment that he, like others at the Fed, misjudged inflation's staying power.
"I was one who firmly said, 'I think this inflation is going to be short-lived. It's going to fall back down. Therefore, let's not overreact,'" he said. "That was obviously wrong."
It was a period of unprecedented uncertainty related to the pandemic, the reopening of the economy and Russia's invasion of Ukraine, Kashkari said, in uncertainty that has only grown.
Former Medtronic Chairman and CEO Bill George, who joined Kashkari on a panel moderated by CNN's Poppy Harlow, said he and other business leaders "have never seen a time of multiple intersecting crises" like the world now faces.
CEOs at a recent meeting in Paris were "very concerned about the situation, but they know they can't change it. They're not going to solve these things," George said.
Monetary policymakers will continue to make mistakes, Kashkari said, but he intends to own the missteps.
"I can't promise you I'm not going to make mistakes in the future," he said. "We want to minimize the mistakes. But even more importantly, we want to identify them early so that we can adjust and then not double down on this misbegotten path."
The Federal Reserve on Wednesday cut its benchmark interest rate by an unusually large half-point, a dramatic shift after more than two years of high rates that helped tame inflation but also made borrowing painfully expensive for American consumers.
