I strongly support the new Statement on Longer-Run Goals and Monetary Policy Strategy¹ that the Federal Open Market Committee has adopted. It incorporates the lessons we have learned from the prior recovery and gives the Committee sufficient flexibility to make up for periods of low inflation in order to achieve our dual mandate goals. …


In the Federal Open Market Committee meeting that concluded on Wednesday of this week, I advocated for a 50-basis-point rate cut to 1.75 percent to 2.00 percent and a commitment not to raise rates again until core inflation reaches our 2 percent target on a sustained basis. I believe an aggressive policy action such as this is required to re-anchor inflation expectations at our target.

Since I became president of the Federal Reserve Bank of Minneapolis in January 2016, I have advocated against interest rate increases because I did not see sufficient evidence that inflationary pressures were building, and I…


This time is different. I consider those the four most dangerous words in economics.

Today, policymakers are paying increased attention to the so-called flattening yield curve — the difference in yields between long-term and short-term Treasury bonds. For the past 50 years, an inverted yield curve, where short rates are higher than long rates, has been an excellent predictor of a U.S. recession. In fact, during this half-century period, each time the yield curve has inverted, a recession has followed. …


Last week, the Federal Open Market Committee raised interest rates for the third time this year and, also for the third time this year, I voted against that increase. I initially dissented in March because I didn’t see much evidence that inflation was climbing toward the Fed’s 2 percent target and there still seemed to be slack in the labor market. I didn’t see the need to tighten monetary policy. Since then, instead of rising, inflation has actually fallen to 1.6 percent. Now a new concern is emerging: In response to our rate hikes, the yield curve has flattened significantly…


Members of the Federal Open Market Committee (FOMC)¹ are trying to understand why inflation and wage growth are low, despite the headline unemployment rate having fallen from a peak of 10 percent during the Great Recession to 4.4 percent today. We would have expected a strong job market to lead to stronger wage growth and then higher inflation as businesses passed their increased costs on to customers. Yet that hasn’t happened. Federal Reserve Chair Janet Yellen offered her thoughts on this topic in a speech last week, and I appreciate her raising this discussion publicly. …


I have been focused on looking for signs that the labor force participation story of the past year or so is coming to a conclusion: The economy had been creating a lot of jobs, but there was little movement downward in the headline unemployment rate. More people than we had expected were interested in working when jobs became available. We knew this couldn’t go on forever, and indicators that this trend was reaching its eventual conclusion would include a significant move downward in the unemployment rate, a move upward in core inflation and/or a move upward in inflation expectations.¹

We…


I have been asked many times about whether and how the Federal Reserve considers asset prices (such as stock prices and house prices) in its determination of the appropriate level of interest rates. Specifically, some people suggest that the Fed should raise interest rates when asset values appear high relative to historical norms to stop asset bubbles from forming, such as the tech bubble in the late 1990s and the housing bubble in the mid-2000s. After all, when the housing bubble burst, it was devastating for the economy, causing the financial crisis and the Great Recession. Wouldn’t the economy have…


On April 4, JPMorgan Chase Chairman and CEO Jamie Dimon published his annual shareholder letter, much of which focused on public policy and financial regulation. At 46 pages, Mr. Dimon’s letter includes a lot of interesting commentary. In this essay, I am going to respond to two of his main points because I strongly disagree with them. First, Mr. Dimon asserts that “essentially, Too Big to Fail has been solved — taxpayers will not pay if a bank fails.” Second, Mr. Dimon asserts that “it is clear that the banks have too much capital.” …


On February 7, I published an essay, “Why I Voted to Hold Rates Steady,” which was a case study that explains the data I look at and framework I use to make my assessment of the appropriate stance of monetary policy. At the February 1 meeting of the Federal Open Market Committee, I voted with all of my colleagues to keep rates steady. Today I publish an update to that initial essay, using the same framework to explain why I again voted to keep rates steady at the FOMC meeting earlier this week. What is different now is that the…


I have spoken about this before: As a Federal Reserve Bank president, I have competing communication demands. On the one hand, many people ask for more transparency about the inner workings of the Fed and our policymaking process. On the other hand, some people say that Federal Reserve officials talk too much — there is a “cacophony”¹ of voices from inside the Fed, which is only leading to noise and confusion about the future path of monetary policy. I am sympathetic to both views.

I have tried to balance these competing objectives by following a couple of simple rules:

  1. To…

Neel Kashkari

President @MinneapolisFed. Views are my own.

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