The surprisingly small increase in jobs in April is an example of just how far the economy is from full employment, said Minneapolis Fed President Neel Kashkari on Friday.
“For all those people who have been saying ‘oh my gosh, the Fed needs to normalize quantitative easing,’ today’s job report is just and example of – we have a long way to go,” Kashkari said, in an interview on Bloomberg Television.
The economy added 266,000 new jobs in April. Economists were expecting a gain of one million jobs.
Kashkari said he was “firmly in the camp” to maintain the Fed’s easy policy stance.
The Fed is buying $120 billion of assets per month, along with keeping its policy rate close to zero, to support the economy.
There have been growing calls for the Fed to take its foot off the gas. Inside the Fed, Dallas Fed President Robert Kaplan has been the lone official, so far, to call for a discussion of when to scale back, or taper, asset purchases.
Kashkari, a leading dove on the central bank, dismissed calls for tapering.
“I don’t see any reason right now to change something that is working,” Kashkari said. He noted the quantitative easing is an “inexact science.”
“You know, could someone say ‘oh, instead of 120 [billion] you should be buying 110,’ sure we could have that debate,” he said.
“What we’re doing right now, I think, is supporting, certainly the housing market, supporting financial markets in general, keeping the yield curve lower, keeping the 10-year down, which bleeds through into all sorts of other different interest rates across the economy,…providing a lot of support to accelerate that recovery,” he said.
The yield on the 10-year Treasury note
was down 2.5 basis points to 1.54% after briefly falling below 1.5% for the first time since early March.
In a separate speech on Friday, Richmond Fed President Thomas Barkin said the increase in jobs in April was below his expectations.
He said the surprisingly weak jobs data might be due to problems of matching unemployed workers to available jobs.
In addition, the fiscal stimulus checks paid to American this year are allowing unemployed workers in low-wage sectors to be “a little choosy” and search for the best position available, Barkin said.
rallied after the report was released, with the Dow Jones Industrial Average up over 200 points in late-day trading.