Fed's Kashkari: We need to keep economy growing

Wednesday, 04. September 2019 19:48

The economy of the United States is bound to slow due to rising downside risk regarding other big counterparts, according to Neel Kashkari. The president of the central bank's subsidiary in Minneapolis warned on Wednesday of uncertainty among businesses, which attribute it to the trade war with China, and expressed concern about the Treasury yield curve inversion. "I think the Federal Reserve will need to do what we can to keep the economy growing" in case of further deterioration, he stressed.

The dovish policymaker, who will have a vote next year on the rate-setting panel, warned business investment has slumped and that "recession warning lights flash." He interpreted the yield curve inversion as a sign "investors are nervous" regarding growth outlook.

"If the trade really gets a lot worse, monetary policy is going to be very limited in its ability to respond to that. Nonetheless, we have a job to do to the best of our ability given the tools that we have," Kashkari stated and asserted the Fed's tools are "imperfect" and "poor" if one wants to "undo the economic harm of a trade war."

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