Minneapolis Fed President Neel Kashkari said in a article that “inflation and wage growth have been surprisingly low” despite tight job market. Now, wages is only growing at 2.7% annually, comparing to 3.5% before the financial crisis.
He pointed out that the headline unemployment rate in the US “captures” only those who are actively looking for jobs. Therefore, the 3.9% unemployment rate may not “capture the true slack” in the market. And “hidden slack” could explain the modest wage growth.
And Kashkari concluded that Fed should hike “only to a neutral policy stance, and not move too quickly”. And that’s until there are more evidence of wage growth and the US is “really” at maximum employment.
