WASHINGTON (Reuters) – The Federal Reserve likely needs to cut interest rates and take aggressive measures to counter an economic slowdown, Minneapolis Federal Reserve Bank President Neel Kashkari said on Friday.
Kashkari, who does not have a vote on monetary policy this year but participates in policy discussions at the U.S. central bank, said the Fed may have gone too far in raising rates in recent years, echoing a criticism frequently made by U.S. President Donald Trump.
But Kashkari disputed the view that high rates were the economy’s biggest problem. Instead, he pointed to economic concerns that have grown more acute as Trump has intensified a trade war with China.
“Very few businesses that I talk to are pointing to the Federal Reserve and saying it is your interest rate policy that is slowing things down,” Kashkari said. “Much more likely it is focused on trade policy and global uncertainty and global anxiety.”
The Fed cut interest rates in July for the first time since 2008, citing signs of a global slowdown, simmering U.S. trade tensions and a desire to boost too-low inflation.
It is widely expected to cut rates again in September.
“We probably need to go ahead and pull back on interest rates to provide more support for the economy,” Kashkari said. “It is much better to be early and aggressive in responding to a slowdown than it is to be late to it.”
(Reporting by Jason Lange, Timothy Ahmann and Howard Schneider; Editing by Chizu Nomiyama)