Neel Kashkari, the Minneapolis Fed president who has been a vocal opponent of interest rate hikes, laid out new thinking on a key benchmark as he expressed support Friday for the central bank’s decision earlier this week to hold rates in place, likely for the year. Kashkari, who will get a vote on the Fed’s rate-setting committee again next year, said in a series of tweets that he needs more time to decide whether the current slowdown in jobs and economic growth — a key reason for the Fed’s pause — is “real or just a blip.” More significantly, he said the dovishness he has long felt about rate hikes was shaped by a belief about a fundamental target called the neutral interest rate that may actually be outdated. The neutral interest rate is one that is high enough to contain inflation but low enough to avoid recession. He wrote that, when he opposed rate hikes in 2017 and 2018, he didn’t think any of them were high enough that they went past neutral and put the country at risk of recession. “My view of neutral has been 2.5 percent nominal,” Kashkari wrote. “But that might not be right. Neutral… Read full this story
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