Minneapolis Fed Chairman Neel Kashkari said he may support keeping interest rates steady at the next central bank meeting to give officials more time to assess the effects of past rate hikes and the inflation outlook.
"From Now On We Can Go A Little Slower"
"I'm open to the idea that we can move a little slower from now on," he said in an interview.
To combat inflation, the FED rapidly increased the benchmark federal funds rate over the past year, and lastly this month, it increased it to a range of 5% to 5.25%, reaching the highest level in the last 16 years.
Officials stated that at the policy meeting on 13-14 June, the decision whether to increase interest rates may be finite. Some of the officials said that inflation and economic activity have not slowed enough to justify keeping interest rates steady. But others, including Fed Chairman Jerome Powell, have hinted that they may skip a rate hike to better examine the potential lagging effects of rapid rate hikes.
Kashkari continued his statement as follows:
“I object to any statement that our work is done. If the committee chooses to skip a meeting because we want more information, I can discuss why it makes sense.
Not changing interest rates to get more information is, in my opinion, very different from saying, 'Hey, we think we're done.
Kashkari said the Fed is vulnerable to the lagging effect of rapid rate hikes and a potential credit crunch from higher bank funding costs resulting from the bankruptcy of three medium-sized lenders since March.
Kashkari also said that although inflation is not falling as fast as officials had hoped, it "seems to be falling":
“At least it's not getting worse. If you add to this the uncertainties regarding the banking sector, are the stresses really over? Any more stress to come out? I think that gives us a reason to say, 'Hey, let's go a little slower'."
*Not investment advice.