Minneapolis Federal Reserve Bank President Neel Kashkari announced Sunday that the Fed’s focus is on curbing inflation, not fighting a recession.
Kashkari, who appeared on CBS’ Face the Nation, said a recession is irrelevant to the Fed’s goals.
A recession “doesn’t change my analysis,” Kashkari said. “I am concentrating on the inflation data. I am concentrating on the payroll data.”
His comments come as President Joe Biden’s administration shifted talk of a recession ahead of a much-anticipated report released on Thursday. This report showed that US GDP has fallen for two consecutive quarters, a good indicator of a recession.
However, the government pointed out that the labor market typically collapses during a recession along with falling GDP. Nevertheless, there is a fear that the labor market could also soon struggle.
The Fed will “do whatever it takes to avoid a recession,” Kashkari said. However, inflation remains the top priority.
Tackling inflation, like the Fed raising interest rates, could trigger a deeper recession. That depends on how aggressive the Fed is in raising rates. Kashkari claimed the Fed’s pledge was to “cut inflation.”
Americans view inflation as their number one concern. Inflation has also been a major contributor to Biden’s falling approval ratings. The White House, Congress and the Fed are under pressure to fight soaring prices.
“We don’t want the economy to overheat. We would love it if we could transition to a sustainable economy without throwing the economy into recession,” Kashkari said.
The latest report revealed that the US annual inflation rate is 9.1%, the highest in 40 years. Kashkari said the US is “far away” from returning to 2% inflation.
https://www.ibtimes.com.au/amid-recession-worries-fed-focused-bringing-inflation-down-1836542?utm_source=Public&utm_medium=Feed&utm_campaign=Distribution Amid recession concerns, the Fed focused on cutting inflation