SANTA BARBARA, Calif., May 16 (Reuters) - The Federal Reserve should allow labor markets to strengthen further and only raise interest rates if wages start to rise so fast that they signal suddenly higher inflation, Minneapolis Fed President Neel Kashkari said Thursday.
Kashkari, who does not vote this year on monetary policy, said that while wages are picking up, it’s not enough to suggest that inflation is on the cusp of a sudden increase. As long as wage growth remains in check, he asked, “why tap the brakes” with an interest rate increase? “We can always raise rates” if wages, and inflation, start to rise too fast, he said.
Reporting by Ann Saphir; editing by Diane Craft