Fed's Kashkari says no U.S. rate hike was right move
By Ann Saphir
MINNEAPOLIS (Reuters) - The Federal Reserve made the "right move" in deciding last week to leave interest rates unchanged, a top Fed official said on Monday, because inflation remains low and more workers are returning to the labor force.
"That to me suggests we have time before we need to adjust rates," Minneapolis Fed President Neel Kashkari told reporters after a symposium on banking regulation at his bank's headquarters.
Fed policymakers voted 7-3 on Sept 21 to hold steady the target rate for overnight lending between banks at 0.25 percent to 0.5 percent. Kashkari currently participates in Fed policy discussions as a non-voter, but rotates next year into a voting role.
"I do think that was the right move. I supported the decision in the meeting," Kashkari said. "It seems to me that the risks of too low inflation are greater than the risks of too high inflation."
Unemployment registered 4.9 percent in August, below what many economists view as sustainable in the long run, and most Fed officials expect it to fall further.
Inflation has run well below the Fed's 2 percent target for four years.
Kashkari said he does not consider himself either a monetary policy dove with a preference for lower rates or a hawk who leans toward higher rates.
Instead, he said, he watches inflation, inflation expectations, and the unemployment rate for clues on the optimal setting for interest rates. Continued...