September 4, 2019 / 6:22 PM / 2 months ago

Fed's Kashkari: Rate cuts a 'poor tool' to undo trade war harm

FILE PHOTO: President of the Federal Reserve Bank on Minneapolis Neel Kashkari listens to a question during an interview in New York, U.S., March 29, 2019. REUTERS/Shannon Stapleton

TORONTO (Reuters) - Cutting interest rates is a “poor tool” to undo the harm to the U.S. economy from an escalating trade war between the United States and China, Minneapolis Federal Reserve Bank President Neel Kashkari said on Wednesday, but the U.S. central bank needs to do it anyway.

“If business investment continues to slump, if the recession warning lights continue to flash, I think the Federal Reserve will need to do what we can to try to keep the economy moving,” Kashkari told the Minneapolis chapter of the National Association of Corporate Directors. The inverted yield curve, he said, is the “most concerning” signal of a possible recession, because it shows how worried investors are about growth.

Writing by Ann Saphir in San Francisco, Editing by Chizu Nomiyama

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