Fed Welcomes Strong Jobs Data as Attention Shifts to Employment: Kashkari

Minneapolis Fed President Neel Kashkari indicated on Monday that the Federal Reserve is optimistic about the robust September jobs report, highlighting the economy’s strength, which the central bank hopes will persist as it prioritizes the labor market.

Kashkari remarked, “It looks like it is still a strong labor market…it’s really good news as we want to keep a strong labor market,” referencing the outstanding September jobs figures.

He noted that the strength of the labor market is encouraging, especially as it contrasts with the historical pattern of rising unemployment during periods of aggressive interest rate hikes.

“Traditionally, when the Fed has raised rates aggressively, it usually leads to weaknesses in the labor market and could trigger a significant increase in unemployment,” Kashkari explained.

“However, we have not seen that, which is a positive sign that the job market has remained strong while inflation has decreased,” he added, mentioning that the Fed’s focus has now shifted away from tackling high inflation.

Kashkari stated, “The balance of risks has shifted from higher inflation to potentially higher unemployment.”

He recognized that monetary policy typically takes time to filter through the economy, but while previous rate hikes could still have significant impacts, he noted, “I’m not seeing much evidence of that.”