Fed's Kashkari: Jobs report shows why more rate hikes needed
WASHINGTON (AP) — The solid U.S. jobs report for October underscores why the Federal Reserve needs to keep raising interest rates higher than it had previously forecast in order to control inflation, Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said Friday.
In an interview with The Associated Press, Kashkari said that at the Fed’s next meeting in December, he expects to issue a higher forecast for where the central bank's benchmark rate will be next year than he did in September. He declined to specify how high a rate he envisions for 2023.
Friday's jobs data showed that hiring is “quite healthy” despite some slowing in recent months, Kashkari said.
"That tells me we have more work to do to try to cool down the economy and bring demand and supply into balance,” he added.
The Fed has raised its key short-term rate six times this year, the last four times by an unusually large three-quarters of a point, in a strenuous effort to curb inflation. Prices are accelerating at nearly the fastest pace in four decades.
To achieve that goal, the central bank hopes to moderate consumer and business spending, slow hiring and reduce economic growth. Yet the risk is rising that the Fed could go so far as to tip the economy into a recession.
Kashkari has generally supported higher rates. He has taken a hawkish line with inflation this year, after having expressed more dovish sentiments in the past. (“Hawks" typically support higher rates to throttle inflation, while “doves” generally prefer lower rates to bolster hiring.)
On Wednesday, after the Fed's latest policy meeting, Chair Jerome Powell opened the door to smaller rate hikes in coming months. He added that a step down to a half-point increase could occur at the Fed's next meeting in December or early...
