Fed's Kashkari: Wage growth is still tepid
Comments by Minneapolis Fed president, Neel Kashkari
- There is more slack in the labour market
- Not the time to tap the brakes on the economy
- Monetary policy is not the right tool to respond to a trade war
- But it is the only tool that we have
- Extended trade war could lower neutral rate further
- We can't model the shock a trade war will have on psychology and how it is going to ripple through to the economy
Do be reminded that Kashkari is the perennial dove in the Fed, though he isn't a voting member this year. So, take that into context when reading his comments. He also adds that talk of a yield curve control is an "interesting idea".
So far, I don't see anything in the above to really cause a stir in the market with regards to Fed pricing. Current odds reflect a ~63% chance of a 25 bps rate cut at the end of this month.