Fed's Kashkari prefers no more rate hikes until inflation hits 2% target
By Greg Robb, MarketWatch
Disagrees with Yellen over interest-rate policy
Minneapolis Fed President Neel Kashari on Monday openly disagreed with Fed Chairwoman Janet Yellen by urging the central bank not to raise interest rates again until inflation hits the central bank's 2% annual target.
"My preference would be not to raise rates again until we actually hit 2% core PCE inflation on a 12- month basis," Kashkari said in an essay posted on his regional bank's website (https://www.minneapolisfed.org/news-and-events/messages/my-take-on-inflation).
Kashkari is a voting member of the Fed's interest-rate policy committee this year. He has dissented from the two rate hikes so far this year.
In a speech last week, Yellen had argued that waiting to hike until inflation moved back to target would be "imprudent." (http://www.marketwatch.com/story/yellen-says-fed-should-be-wary-of-raising-rates-too-gradually-2017-09-26) She said moving too gradually would risk the economy overheating or causing bubbles in asset markets.
The year-on-year growth rate of core PCE inflation sank to 1.3% in August (http://www.marketwatch.com/story/yellens-mystery-of-low-inflation-no-closer-to-being-solved-as-prices-ease-again-in-august-2017-09-29).
In his essay, Kashkari said Fed's rate hike campaign over the past three years was mistaken. He said monetary policy was not as stimulative as hoped for and the main impact of the moves was to cause falling inflation expectations, and somewhat slower job growth, wage growth and inflation.