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Fed's Kashkari: Rate hike break keeps track of US growth



(Reuters) – The Federal Reserve's decision to stop raising the interest rate puts a "fundamentally healthy" US economy on its way to further growth, said Minneapolis Federal Reserve Bank President Neel Kashkari on Sunday.

FILE PHOTO: Federal Reserve Mayor Jerome Powell is holding a press conference after a political meeting in Washington, USA, January 30, 2019, in Washington, USA. REUTERS / Leah Millis / File Photo

"I think we still have room to run in the US economy," Kashkari said at a town hall at a church in Long Lake, Minnesota.

"The US economy is fundamentally healthy," he added. The incident was closed but a sound recording was distributed afterwards.

"We at the Fed cannot control whether Europe has a crisis or if China has a hard landing, but we can control our own mistakes; so if we can avoid losing the brakes prematurely, I think the expansion can continue. "

Last week, the Fed pledged to continue raising prices, and instead pledged patience for further policy changes. The poor shift was cheered by financial markets, but sounded to some analysts as a warning of financial weakness ahead.

The decision also seemed to deliver President Donald Trump what he had demanded in tweets and interviews over the past few months – a halt to what he called Fed's "crazy" interest rate which, in his view, was underestimating the growth he's been trying to promoting.

The Fed has increased prices since December 2015, including four times last year, to a current 2.25 percent area to 2.5 percent.

Kashkari comments give a positive spin on last week's decision.

"I think there are more people out there who want to work; let's keep the economy going and if we see signs so wages pick up, inflation picks up, we can always hit the brakes then; just do not press the brakes prematurely, said Kashkari.

There is a view Kashkari has stuck out several times over the last couple of years, but only recently has it been adopted by his political attorneys.

There are some Risks, including slower growth in China and confusion around Britain's exit from the EU, he said. Optimism driven early last year by the fact that Trump's sharp tax cuts have wiped out, including in connection with growing concerns over trade tariffs, Kashkari said that some companies should not invest.

Nevertheless, he said the US economic outlook was strong, as long as there are no signs, the economy is overheated, he said, the Fed should not risk pushing short-term prices over the long-term, and creating a called inverted yield curve that will lead to a recession.

Announcement of Ann Saphir in Portland, Oregon; Editing by Peter Cooney

Our Standards: Thomson Reuters Trust Principles.

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