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4/8, 8:32 PM (Source: TeleTrader)
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Kashkari: Fed won't raise rates 'preemptively'

President of the Minneapolis Federal Reserve Bank Neil Kashkari stated during a meeting of the Economic Club of New York on Thursday that the Fed wouldn't be raising its rates "preemptively", although he believes the headline unemployment rate understates slack, therefore the real unemployment rate currently is actually at 9.1%.

Kashkari also said that Fed would have to "tap breaks" if the rise in government debt caused inflation, but the US spending in response to COVID-19 has been wise and although borrowing capacity isn't unlimited, the US has a lot of debt capacity.

The Fed official confirmed that long-term inflation expectation remains solidly anchored around the 2% target mark, but a temporary blip of up 2.5% inflation would not surprise him, nor would it require any response.

Breaking the News / LH