Interest rates should stay on hold ‘for a while longer’: Federal Reserve’s Kashkari

MINNEAPOLIS Federal Reserve Bank President Neel Kashkari on Wednesday reiterated his view that he is unsure how restrictive monetary policy is right now, and that borrowing costs should stay where they are as US central bankers take stock of inflation.

“The biggest uncertainty in my mind is how much downward pressure is monetary policy putting on the economy? That’s an unknown,” Kashkari told the Williston Basin Petroleum Conference in Bismarck, North Dakota. “And that tells me we probably need to sit here for a while longer until we figure out where underlying inflation is headed before we jump to any conclusions.”

The economy and the housing market have been more resilient than expected, he said, and Americans have been spending more than anticipated given the increase in the Fed policy rate to its current 5.25 to 5.5 per cent range.

Kashkari did not comment on government data released on Wednesday that showed inflation edged down in April, after proving stronger than expected during each of the first three months of the year. REUTERS