by Reuters
Kitco
WASHINGTON, May 7 (Reuters) – The strength of the U.S. housing market and potentially stalled progress on inflation means monetary policy may not be as tight as Federal Reserve officials think it is, Minneapolis Federal Reserve President Neel Kashkari said in a new essay, opens new tabon Tuesday that raises the possibility price pressures are “settling” to a level above the Fed’s 2% target.
Wrongly estimating how current policy is affecting the economy “could explain the constellation of data we are observing,” particularly in housing but more broadly in ongoing economic growth, Kashkari wrote. Housing in particular is “proving more resilient to…tight policy than it generally has in the past,” depriving the Fed of what is typically a key channel for the impact of high interest rates to be felt.