MNI BRIEF: Fed's Kashkari Worried About Uncertainty, Layoffs

Minneapolis Fed President Neel Kashkari said Thursday he is worried that a prolonging of trade uncertainty from Washington could result in layoffs from businesses, but he is not seeing an uptick in firing notices yet. 

"What I'm a little bit worried about right now is there's enough overhanging uncertainty in the economy then maybe businesses are going to start laying people off. We haven't seen it yet," Kashkari said in Q&A at an University of Minnesota event. "We're not seeing an uptick that there's some big tariff uncertainty induced layoffs. We're not seeing announcements of big layoffs yet, though some businesses are scenario planning for potential layoffs depending how long this uncertainty lasts." (See: MNI INTERVIEW: Fed Must Stay Hawkish Amid Tariff Shock-Kamin) 

Kashkari also commented that as a general economic matter the imposition of tariffs could raise the neutral interest rate. "The interest rate will go up, and the neutral rate that balances the economy will be higher." He did not comment directly on the near-term path of monetary policy.