Fed's Kashkari: FOMC should not increase rates further until inflation returns to target

The Minneapolis Fed President Neel Kashkari recently published an essay in which he explained why he voted agains the rate hike in the FOMC's December meeting.

Key quotes

In response to our rate hikes, the yield curve has flattened significantly, potentially signaling an increasing risk of a recession.

Together, these factors make a compelling case that the FOMC should not increase rates further until we are much more confident that inflation is returning to our target.

When inflation climbs above the Fed’s target, the FOMC raises interest rates, which slows economic activity, wage growth and inflation.

We cut rates to do the opposite. At least that how it’s supposed to work.

The job market is not as tight as the 4.1 percent unemployment rate suggests.

Monetary policy is entering a delicate phase.

We all want the economic expansion to continue. However, continuing to raise rates in the absence of increasing inflation could needlessly hold down wage growth while potentially increasing the chance of a recession.