FILE PHOTO – President of the Federal Reserve Bank on Minneapolis Neel Kashkari listens to a question during an interview in New York, U.S., March 29, 2019. REUTERS/Shannon Stapleton
February 16, 2022
By Ann Saphir
(Reuters) -Minneapolis Federal Reserve Bank President Neel Kashkari said Wednesday it’s ‘appropriate’ for the U.S. central bank to take steps to normalize monetary policy to deal with high inflation, but warned against raising rates too fast or too far.
“My caution to my colleagues, and to myself, is, ‘let’s not overdo it,’” Kashkari said at a town hall for United Natural Foods Inc. employees, noting that an aging population among other factors will tend to pull inflation down over time. “If we raise rates really aggressively, we run the risk of slamming the brakes on the economy, putting the economy into recession, which would then — we’d be crashing back down into this low inflation environment.”
The Fed is expected to start raising rates in March, with the debate currently focused both on how big of an increase it should start with, and how far rates should rise, to deal with inflation that’s the highest it has been in nearly 40 years. Some Fed officials believe the Fed ought to start with a bigger-than-usual half-percentage point rate hike to make clear that it has joined the fight on inflation; others who appear to be in the majority say a smaller quarter-point hike is merited.
Kashkari said he and his family had COVID-19 earlier this year, and the experience drove home for him that it will take some time for the economy to get back to normal.
“A lot of families are experiencing what we just experienced,” Kashkari said, explaining that his family’s bout with the disease meant three weeks of disrupted work.
“This will be a while” before people can be comfortable living with COVID, before workers on the sidelines of the labor force can return to work, and before supply chains will catch up, he said.
(Reporting by Ann Saphir; Editing by Andrea Ricci)
Source: One America News Network
