By Investing.com — Minneapolis Fed President Neel Kashkari suggested Monday that the Fed welcomed the strong September jobs report, underscored the strength economy, which the central bank hopes will continue as its focus is now on the labor market.
“It looks like it is still a strong labor market…it’s really good news as we want to keep a strong labor market,” Neel Kashkari said, referencing the blowout September jobs report.
The Minneapolis Fed president said the strength in the labor market was welcomed as it bucked the historical trend of a spike in unemployment during a period of aggressive rate hikes.
“Traditionally, when the Fed has raised rates aggressively that usually manifests in weakness in the labor market and could [trigger] a big increase in unemployment,” Kashkari said.
“We have not seen that, so that’s a really good fact that the job market has stayed strong while inflation has come down,” he said, adding that the focus for the Fed has shifted away from high inflation.
“The balance of risks has shifted away from higher inflation towards maybe higher unemployment,” Kashkari said.
Acknowledging that monetary policy usually works with a lag, the Minneapolis Fed president said that while he can’t rule out the possibility that the previous rate hikes may yet have a big impact on the economy, he wasn’t “seeing much evidence of that.”