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Fed may not be able to engineer higher inflation - Kashkari

 Fed may not be able to engineer higher inflation - Kashkari

SANTA BARBARA, Calif. (Reuters) - The Federal Reserve should not cut interest rates unless there is hard data signalling economic weakness ahead, Minneapolis Fed President Neel Kashkari said on Thursday, and should not rely on a rate cut to try to kickstart a healthier level of inflation.

"I am not sure that cutting rates would do much to inflation expectations," Kashkari told reporters after giving a talk in Santa Barbara, California. "It might take some surprise, that maybe wage growth all of a sudden does pick up, and then that leads to high inflation, and then importantly we shouldn’t respond very much, to allow that to go above target."

He added, "I don’t think it’s completely in our control getting inflation back to 2%."

Kashkari, who does not vote this year on monetary policy, said that while wages are picking up, it is not enough to suggest that inflation is on the cusp of a sudden increase. As long as wage growth remains in check, he asked, "why tap the brakes" with an interest rate increase?

"We can always raise rates" if wages, and inflation, start to rise too fast, he said.

(Reporting by Ann Saphir; Editing by Meredith Mazzilli)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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Updated Date: May 17, 2019 02:05:08 IST