U.S. Markets

Fed's Kashkari sticks to view that rates do not need to rise

FILE PHOTO - Minneapolis Fed President Neel Kashkari speaks during an interview at Reuters in New York February 17, 2016. REUTERS/Brendan McDermid

(Reuters) - The Federal Reserve should hold off on raising U.S. interest rates to allow more workers to get jobs, adding that the central bank can always raise rates to head off inflation if it starts to rise too fast, Minneapolis Fed President Neel Kashkari said on Thursday.

Speaking at the Minnesota Ag and Food Summit, Kashkari said he sees no signs of overheating yet, or of inflation taking off. Low wage growth suggests there is more slack in the labor market, he said.

Kashkari’s view is distinct from most at the Fed who believe the Fed needs to raise interest rates at least a few more times given that they remain stimulative despite low unemployment of 3.7 percent and inflation near the Fed’s 2-percent goal.

Kashkari on Thursday said his view is that U.S. interest rates, now targeted by the Fed to between 2 percent and 2.25 percent, are “pretty close” to neutral.

Reporting by Ann Saphir; Editing by Chizu Nomiyama and Diane Craft