Neel Kashkari, Interview: CNBC

Fed Funds

“Obviously, I too was surprised by the big jobs number. It tells me that so far, we’re not seeing much of an imprint of our tightening to date on the labor market. There’s some evidence that it’s having some effect, but it’s pretty muted so far. I haven’t seen anything yet to lower my rate path, but I’m obviously keeping my eyes open and we’ll see how the data comes in, but right now, I’m still at around 5.4%. If I had to pick a number today, I’d be where I was in December.”

Jobs

“Well, it did surprise me. I certainly was not expecting a 500,000 job print for January, so I think it surprised all of us. Nobody should overreact to one report. Reports sometimes are hot, sometimes they’re cold. But the underlying strength of the services sector of the economy is still very robust. That’s where I think a lot of us are focusing our attention.”

“It’s hard to imagine that you’re going to see very strong job growth while wage growth is moderating, and that’s what I’m looking for. We need to see wage growth at 3% to be consistent with our 2% inflation target and 1% productivity growth. Wage growth has come down somewhat, but depending on your measure, it’s still four, four and a half, even five on a 12-month basis. The job market and the services and wages are still very robust.”

Inflation

“Well, that’s good news and it’s better than them climbing, but the three-month numbers tend to be quite volatile. We can all pick a number at any given time that tells us the story that makes us feel better or worse about the outlook. We need to be disciplined. The most disciplined way is to pick a number in advance and then stick with it, that that’s our focus. We’ve said 12-month PCE inflation is our ultimate goal. Total inflation, not just core inflation … We’ve sliced this all different ways to try to give us information about where inflation is headed. I’m not seeing that we’ve made enough progress yet to declare victory.”