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Kashkari: Federal Reserve Doesn't Need to Protect Investors

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Another Federal Reserve president has spoken out on interest rates. Neel Kashkari says there is no need for interest rate hikes right now but that the US Federal Reserve does not exist to protect investors.

Though the stock markets are exhibiting "nervousness," says Kashkari, investors have to figure out what to do next.

We are not here to protect investors from losses. This is a capitalistic economy we live in and if investors take risks, they should bear the consequences of those risks.

But, says the Minneapolis Federal Reserve chief:

We pay attention to the stock market.

No Reason to Apply Economic Brakes

Kashkari, echoing Atlanta Federal Reserve President Raphael Bostic's recent comments, believes it's time to stop interest rate hikes:

I don't see any reason that we need to tap the brakes pre-emptively on the economy, let's let the job market continue to strengthen and wages and inflation pick up and we can always raise rates then.

Bostic said last week that, amidst uncertainty:

The appropriate response is to be patient in adjusting the stance of policy and to wait for greater clarity about the direction of the economy and the risks to the outlook.

After a slew of interest rate hikes in 2017 and 2018 and a declining equities markets at the end of 2018, the US Federal Reserve took the pressure off the markets early this January. Federal Reserve Chair Jerome Powell said:

We will be patient as we watch to see how the economy evolves.

The markets responded, with five days of consecutive gains.

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