MARQUETTE, MICHIGAN (REUTERS) - The Federal Reserve should not be in any hurry to raise US interest rates because inflation is so low and the economy is still short of full employment, a top Fed official said on Tuesday (July 12).
"We feel like we can be patient to let the economy continue to heal before we start moving aggressively to raise rates," Minneapolis Fed president Neel Kashkari said at a town hall in Marquette, Michigan. "We should take our time when we go ahead and start raising rates again. There's not a huge urgency to raise rates because inflation is coming up low."
When they meet later this month Fed policymakers will evaluate a run of data, including a job increase of 287,000 in June, to gauge whether the US recovery is on track.
Traders see zero chance of a rate hike this month and are betting the Fed will wait to raise rates until mid-2017, with officials like Federal Reserve governor Daniel Tarullo saying they are unconvinced inflation is moving adequately towards the central bank's 2 per cent target.
Mr Kashkari's comments show he likely sides with Mr Tarullo and other so-called doves who want to keep rates where they are, at least as long as inflation is low.
At the same time, Mr Kashkari made clear he still expects moderate growth ahead and no recession, and therefore no need for the Fed to ease policy.
"The key driver for us is, how do we put as many people back to work as possible while preventing the economy from overheating," said Mr Kashkari, who is not a voting member on Fed policy this year but will rotate into a voting spot next year.