Neel Kashkari head of the Federal Reserve Bank in Minneapolis puts out fire Janet Yellen started
- says Fed doesn’t want to cut off recovery prematurely
- says if raise taxes to pay for new spending, that won’t be inflationary
- not concerned that fiscal packages so far will create inflation
- once the labour market is recovered, inflation back to target, will normalize monetary policy
- full employment may take a few years
The president of the Federal Reserve Bank of Minneapolis, Neel Kashkari,said that the bank has “powerful tools” to push inflation down in case it surprises higher. Kashkari says he is not indicating hikes any time soon. He told CNN that the bank will normalize its monetary policy once the labour market is recovered, adding that the Fed doesn’t want to cut off recovery prematurely which is in line with the bank’s goal to, not only restart the economy but also avoid the virus flaring back up and potentially taking back all the progress that was made. With the rescue packages approved by global economies and the pent-up consumer demand, which is expected to drive prices up, worries remain that the lack of policy adjustments could lead to halting the overall economic recovery from the health crisis.