Federal Reserve Bank of Minneapolis President Neel Kashkari said Friday that he advocated for cutting rates by 50 basis points in Wednesday’s policysetting committee.
In a blog post, Kashkari wrote that an “aggressive policy action” was necessary to improve inflation expectations. The Fed has undershot its 2% inflation target since adopting that goal in 2012.
Kashkari said cutting rates may not even be enough, suggesting that the Fed also commit to not raising rates until core inflation reaches the Fed’s target.
“Given that it has taken years for the markets to learn our current reaction function, I don’t believe a rate cut or two in isolation will do much to boost inflation expectations,” Kashkari wrote.
The Fed did not move on rates on Wednesday, electing to keep the benchmark interest rate in the target range of 2.25% to 2.5%.
Only one voting member of the Federal Open Market Committee dissented against that decision: St. Louis Fed President James Bullard. Bullard wrote Friday that his call for lower rates was also related to undershooting inflation.
“Even if a sharper-than-expected slowdown does not materialize, a rate cut would help promote a more rapid return of inflation and inflation expectations to target,” Bullard wrote.
Kashkari is not a voting member of this year’s FOMC. Since becoming president of the Minneapolis Fed in January 2016, he has advocated against interest rate increases. During his time on the 2017 FOMC, he voted against three decisions to raise rates.
Brian Cheung is a reporter covering the banking industry and the intersection of finance and policy for Yahoo Finance. You can follow him on Twitter @bcheungz.