Fed’s Kashkari: Current rates might be one foot on the brake, not two

Minneapolis Fed President Neel Kashkari stated overnight that Fed likely needs to keep interest rates at the current level for “a while longer,” raising questions about how much they are restraining the US economy.

He highlighted that the “biggest uncertainty” is understanding the exact amount of “downward pressure” monetary policy is putting on the economy. This uncertainty means Fed “probably need[s] to sit here for a while longer” until there is more clarity on where “underlying inflation is headed” before drawing any conclusions.

He remarked on the surprising “resilience” of the economy, suggesting that current interest rates might mean “we’re putting one foot on the brake and not two.”