With inflation expectations anchored and inflation itself running below the Federal Reserve's 2-percent target, there is no rush to raise interest rates, Minneapolis Fed President Neel Kashkari said on Thursday.
"There does not appear to be any urgency to raise rates when inflation is coming up low," Kashkari said at a town hall meeting in Rapid City, South Dakota.
Kashkari does not have a vote this year on Fed policy but takes part in its regular policy-setting meetings. Waiting too long to raise rates, he said, is less risky than raising rates too soon, because the Fed has the tools to tamp down inflation should it rise too high.
Last week the Fed decided to leave rates unchanged and give the economy more time to create jobs and for inflation to rise. Most Fed officials believe it will be appropriate to raise rates by December, although Kashkari has not indicated when he prefers to see a rate hike.
On Thursday he said he believed that while economic growth is still quite sluggish, there are no alarm bells in the data suggesting a recession is imminent.
If one were to happen, he said, the Fed has plenty of ammunition to fight it, and would likely not need to resort to reducing interest rates to below zero, as the central banks of several other countries have tried.
Politics does not factor at all into the Fed's decisions, Kashkari said.
"I am agreeing with people in terms of interest rates who I shouldn’t be agreeing with, if it were up to politics," said Kashkari, who ran as a Republican for California governor and was an appointee to the Treasury by a Republican president. Republican presidential candidate Donald Trump has accused Fed Chair Janet Yellen of keeping interest rates low to benefit President Barack Obama, who appointed her.
(Reporting by Ann Saphir; Editing by Chizu Nomiyama)