A regional Fed chief offered the latest hint at when the central bank might resume rate hikes

The Federal Reserve should hold off on interest rate hikes until inflation hits 2%, Minneapolis Fed president Neel Kashkari told CNBC Monday.

The statement comes five days after the Federal Open Market Committee issued its third rate cut of the year and signalled it would pause adjustments to sustain the current level of growth. The pause in rate cuts led analysts to speculate whether the Fed would begin shifting its rate higher.

The Fed should “make an announcement today” that it won’t raise rates until core inflation reaches its target level, Kashkari said. He added that issuing such forward guidance could be used as a tool to boost inflation.

“That’s not a commitment to cut rates, that’s not a commitment to hold forever, it’s simply saying we’re not going to raise rates prematurely,” he said.

Fed Chair Jerome Powell struck a similar tone during an October 30 press conference, saying the bank would need to see a “really significant” jump in inflation to issue a rate hike.

Core inflation last stood at 1.7% in September. October’s reading is scheduled for release on November 13. The metric hasn’t reached its 2% target since December 2018.

The US economy faces a mix of factors moving forward. The unemployment rate continues to sit near a 50-year low, and the labour market shows signs of further expansion. Yet the US-China trade war and the Brexit outcome may bring abrupt headwinds to economic growth, Kashkari said.

“If the economy continues to perform as we expect, I would expect we’re done for a while,” he said. “But we need to see. I think things can change pretty quickly.”

The Fed last hiked rates from December 2015 to December 2018. The bank cut its rate in July for the first time since the financial crisis, and issued another cut in September.

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