(Bloomberg) — Federal Reserve Bank of Minneapolis President Neel Kashkari has not yet decided if he will back accelerating the central bank’s interest-rate increases when officials meet later this month, amid signs inflation is not cooling as hoped.
(Bloomberg) — Federal Reserve Bank of Minneapolis President Neel Kashkari has not yet decided if he will back accelerating the central bank’s interest-rate increases when officials meet later this month, amid signs inflation is not cooling as hoped.
“I’m open-minded, at this point, about whether it’s 25 or 50 basis points,” Kashkari said Wednesday in a question-and-answer session in Sioux Falls, South Dakota. “To me, much more important than whether it’s 25 or 50 is what we signal in what’s called the dot plot,” he added, referring to the Fed’s quarterly forecast for the path of its benchmark policy rate.
Policymakers raised their benchmark rate by a quarter percentage point to a range of 4.5% to 4.75% on Feb. 1. The smaller move followed a half-point increase in December and four jumbo-sized 75 basis-point hikes prior to that.
“We’re not yet seeing much of a sign of our interest-rate increases slowing down the services sector of the economy and that is concerning to me,” he said. “Wage growth is at a level that it actually is too high to be consistent with our” 2% inflation target.
Minutes from the January discount rate meetings showed that directors from the Minneapolis Fed favored a 50 basis point hike in that rate. Those votes are typically a proxy for how the president would like to vote on the federal funds rate at the upcoming Federal Open Market Committee meeting.
Minutes from the Jan. 31-Feb. 1 FOMC meeting showed that “a few” participants favored or could have supported a 50 basis point hike. But Kashkari, who votes on policy this year, ultimately joined his colleagues in voting for the smaller increase.
Several recent reports have shown inflation accelerated more than forecast in January, a surprising pivot after prices had cooled in the last three months of 2022. The labor market also remained tight at the beginning of the year, with employers adding a whopping 517,000 jobs in January.
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