Minneapolis Fed's Kashari: No Urgency to Raise Rates

By Karen Mracek

     WASHINGTON (MNI) - Minneapolis Federal Reserve Bank President Neel Kashkari

stuck to his view Thursday that there's still slack in the labor market and,

thus, no need to raise rates anytime soon.

     "There's no need to cool the economy down," he said in a moderated Q&A

session at the Edina (Minn.) Rotary Club.

     "So far, inflation has continued to undershoot our target and wage growth

has continued to be soft," he added. "So I continue to maintain that there is no

urgency to raising rates."

     Kashkari, who is a voter this year on the policymaking Federal Open Market

Committee, dissented on the two decisions earlier in the year to raise interest

rates by 25 basis points.

     While acknowledging the job market has been getting "stronger and stronger

and stronger" over the past few years, he does not think the economy has reached

maximum employment. 

     "My view is there has still been slack in the labor market," Kashkari said.

"We have been misled to believing that the labor market is already at full

strength because of all these folks who have left the job market."

     The 200,000-plus monthly job gains the U.S. has been good, he said, given

only 100,000 to 125,000 are need to keep up with population growth.

     Still, "wages have not been growing quickly, inflation has been growing

slower than our 2% target and it seems like there's some slack left in the job

market," he noted.

--MNI Washington Bureau;tel: +1 202 371-2121; email: karen.mracek@marketnews.com

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