To address inflation, the Fed is expected to begin raising interest rates

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To address inflation, the Fed is expected to begin raising interest rates

Transcript¹

NPR's Rachel Martin speaks with Neel Kashkari, president and CEO of the Federal Reserve Bank of Minneapolis, about the U.S. economy, inflation concerns and interest rates.

RACHEL MARTIN, HOST:

The U.S. economy is growing faster than many had expected. The country's gross domestic product grew 5.7% in 2021. That's the biggest increase since 1984. But not everyone is feeling encouraged by those figures with surges of the coronavirus keeping a real economic recovery still out of reach. And with growing concerns over inflation, the Federal Reserve faces some tough decisions. Neel Kashkari is the president and CEO of the Federal Reserve Bank of Minneapolis, and he joins us this morning. Thanks for being here.

NEEL KASHKARI: Thanks for having me.

MARTIN: So I noted² economic growth is, like, going gangbusters - right? - fastest pace in decades. But inflation is also at record levels. How do you grade the current state of the U.S. economy?

KASHKARI: You know, the economy went through a very rapid shutdown when the COVID panic hit us, and it's recovering very quickly. And that's good news. But the recovery has been uneven³, so we've seen a surge of demand from consumers and businesses who want to buy things. But the supply side to produce all those goods has not expanded quite as quickly. And so, yes, we're seeing very strong growth, which is good. We're seeing a lot of job creation over the past year. But we're also seeing high prices because supply can't keep up. And so the economy is doing well fundamentally. But it's a little bit imbalanced right now, and we need to bring it back into balance.

MARTIN: So the administration - the Biden administration talks about longer term plans, encouraging more manufacturing at home, but that - we're not going to reap dividends⁴ of that for a long time. So how do you fix it in the short term? What's the Fed's role here?

KASHKARI: Well, the Fed's role - our primary job - we were created in part to balance out the economy, to keep - we have two goals that we always talk about - maximum employment - as many Americans as working as possible - but also stable prices. And so right now, the job market is very strong. But there's also a lot of wage increases and a lot of price increases at the grocery store. So the way we bring that into balance is we will tend to tighten⁵ monetary⁶ policy - that's what we call it - by raising interest rates to make it a little bit more expensive for people to buy a home or buy a car or for a business to get a loan. We haven't raised interest rates yet, but we have signaled that we are likely to begin that process soon. That would then not tap the brakes in the economy, but it would let our foot off the accelerator just a little bit.

MARTIN: How many rate hikes are needed?

KASHKARI: Well, that's a good question. You know, we think a lot of - the reason that prices are high right now are temporary factors related to the COVID. So, for example, supply chains are still disrupted. People are nervous about going back to work. The hope is that as the supply chain sort themselves out, some of these price pressures will naturally relieve themselves. And then that means the Federal Reserve will have to do less. So right now, the committee has signaled - the Federal Open Market Committee - that most people - most participants think there will probably be three rate increases this year, about 25 basis points each. But, you know, we have to see how the data comes out.

MARTIN: The markets are now starting to price in five rate hikes. Is three enough?

KASHKARI: Well, again, we just don't know. It's going to depend on what happens to supply chains, what happens to workers. We're still missing - I said the job market is very strong, but we're still missing three or four million workers relative to where we should have been had there been no pandemic. How many of those workers are going to come back to the job market and how quickly, we have to wait and see.

MARTIN: Is that some of why you changed your mind? Because your previous view was the interest rate should stay at zero, at least until 2024, right?

KASHKARI: That's correct. So the high inflation that we've seen has been higher than I expected, and it's lasted longer. And as I talk to large global businesses, they're saying these supply chains are taking a lot longer to sort out, and they don't have a great visibility into when those supply chains will go back to normal. I also thought we would have seen more workers return until now. But with the delta⁷ wave and now the omicron wave, it seems like it's putting a damper on some people coming back. So COVID still is a really important factor here.

MARTIN: Some economists⁸ say the central bank waited too long to address inflation. Do you agree?

KASHKARI: I don't agree. You know, one of the challenges we had in the last crisis, the 2008 crisis and the recovery, was the recovery was so slow. It took such a long time, almost 10 years, to put all Americans back to work. And so this time, Congress acted much more aggressively, and the Federal Reserve acted even more aggressively than it did in 2008. That was the right thing to do. I think it's better to err⁹ on the side of doing too much than too little. And now we are adjusting as the data comes in.

MARTIN: Aside from inflation, which is big and hard to set aside, but if you do that, what do you see as the biggest obstacle for continued economic growth in 2022?

KASHKARI: Well, there's the - the pandemic is certainly still the most important factor that we're all focusing on. And it's not just in America. If the pandemic continues to rage in Asia, for example, that will affect U.S. supply chains that go back to Asia. We're also focusing on geopolitical risk, you know, all around the world. That's top of mind. And, of course, it's just the Labor¹⁰ Department - or the labor supply, rather. When are workers going to come back in? And so those are the big factors that I think are going to determine how the economy overall performs, and the Federal Reserve will adjust what we do based on these other global factors.

MARTIN: Minneapolis Federal Reserve Bank President Neel Kashkari, we appreciate your time and your perspective. Thank you.

KASHKARI: Thank you.

1 transcript   

n.抄本，誊本，副本，肄业证书

参考例句：

• A transcript of the tapes was presented as evidence in court.一份录音带的文字本作为证据被呈交法庭。
• They wouldn't let me have a transcript of the interview.他们拒绝给我一份采访的文字整理稿。

2 noted   

adj.著名的，知名的

参考例句：

• The local hotel is noted for its good table.当地的那家酒店以餐食精美而著称。
• Jim is noted for arriving late for work.吉姆上班迟到出了名。

3 uneven   

adj.不平坦的，不规则的，不均匀的

参考例句：

• The sidewalk is very uneven—be careful where you walk.这人行道凹凸不平—走路时请小心。
• The country was noted for its uneven distribution of land resources.这个国家以土地资源分布不均匀出名。

4 dividends   

红利( dividend的名词复数 )； 股息； 被除数； （足球彩票的）彩金

参考例句：

• Nothing pays richer dividends than magnanimity. 没有什么比宽宏大量更能得到厚报。
• Their decision five years ago to computerise the company is now paying dividends. 五年前他们作出的使公司电脑化的决定现在正产生出效益。

5 tighten   

v.(使)变紧；(使)绷紧

参考例句：

• Turn the screw to the right to tighten it.向右转动螺钉把它拧紧。
• Some countries tighten monetary policy to avoid inflation.一些国家实行紧缩银根的货币政策，以避免通货膨胀。

6 monetary   

adj.货币的，钱的；通货的；金融的；财政的

参考例句：

• The monetary system of some countries used to be based on gold.过去有些国家的货币制度是金本位制的。
• Education in the wilderness is not a matter of monetary means.荒凉地区的教育不是钱财问题。

7 delta   

n.（流的）角洲

参考例句：

• He has been to the delta of the Nile.他曾去过尼罗河三角洲。
• The Nile divides at its mouth and forms a delta.尼罗河在河口分岔，形成了一个三角洲。

8 economists   

n.经济学家，经济专家( economist的名词复数 )

参考例句：

• The sudden rise in share prices has confounded economists. 股价的突然上涨使经济学家大惑不解。
• Foreign bankers and economists cautiously welcomed the minister's initiative. 外国银行家和经济学家对部长的倡议反应谨慎。 来自《简明英汉词典》

9 err   

vi.犯错误，出差错

参考例句：

• He did not err by a hair's breadth in his calculation.他的计算结果一丝不差。
• The arrows err not from their aim.箭无虚发。

10 labor   

n.劳动，努力，工作，劳工；分娩；vi.劳动，努力，苦干；vt.详细分析；麻烦

参考例句：

• We are never late in satisfying him for his labor.我们从不延误付给他劳动报酬。
• He was completely spent after two weeks of hard labor.艰苦劳动两周后，他已经疲惫不堪了。