There is no need to quickly lower interest rates because the level is not high enough to push down growth very much, Minneapolis Fed President Neel Kashkari said Monday.
“The current stance of monetary policy…may not be as tight as we would have assumed,” Kashkari said in an essay published on his bank’s website.
“The implication of this is that, I believe, it gives the FOMC time to assess upcoming economic data before starting to lower the federal funds rate, with less risk that too-tight policy is going to derail the economic recovery,” Kashkari concluded.
The Fed’s benchmark rate is now in a range of 5.25%-5.5%.
The U.S. economy grew at a 3.3% rate in the fourth quarter and at a 4.9% rate in the third quarter, surprising economists who thought the Fed rate hikes would cause a recession.
The Atlanta Fed’s GDPNow forecast estimates that the economy will expand at a 4.2% rate in the first quarter.
Federal Reserve Chairman Jerome Powell told CBS News’ “60 Minutes” program that the Fed has time to be careful about the first rate cut. He again indicated that a cut in March was not very likely.
Stocks
DJIA
SPX
opened lower on Monday while the Treasury note
BX:TMUBMUSD10Y
rose 10 basis points to 4.125%. Investors are still reacting to the surprise 353,000 surge in nonfarm payrolls in January.
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