WHEN: Today, Monday, March 20th
WHERE: CNBC's "Squawk Box"
Following are excerpts from the unofficial transcript of a FIRST ON CNBC interview with Minneapolis Fed President Neel Kashkari on CNBC's "Squawk Box" (M-F, 6AM-9AM ET) today, Monday, March 20th. Following are links to the video on CNBC.com:http://video.cnbc.com/gallery/?video=3000602719, http://video.cnbc.com/gallery/?video=3000602720 and http://video.cnbc.com/gallery/?video=3000602713
All references must be sourced to CNBC.
KASHKARI ON INFLATION
I WANT TO SEE INFLATION, CORE INFLATION, MOVE UP TOWARDS OUR 2% TARGET. IT'S SUPPOSED TO BE A SYMMETRIC TARGET. I THINK WE'RE BEHAVING AS THOUGH IT'S A CEILING. WE'RE AT 1.7% CORE INFLATION. THAT MEANS 2.3% IF WE WERE ABOVE IT, SHOULDN'T BE ANY MORE CONCERNING. SO WE HAVE A LOT OF ROOM HERE TO LET INFLATION CLIMB BACK TO TARGET, ALLOW THE JOB MARKET TO CONTINUE HEALING, ALLOW WAGES TO START CREEPING UP. WE'RE JUST A LONG WAY AWAY FROM HAVING ANYTHING TO BE CONCERNED ABOUT. SO MY REACTION IS, MY QUESTION IS, WHY ARE WE RAISING RATES UNTIL THE DATA TELLS US IT'S REALLY TIME.
KASHKARI ON HIGHER RATES
SOMEBODY NEEDS TO EXPLAIN TO ME HOW HIGHER RATES LEADS TO MORE INVESTMENT, LEADS TO FASTER ECONOMIC GROWTH. AT THE CORE OF THIS, THE PEOPLE WHO ARE SAYING THE FED JUST NEEDS TO GET GOING, THEY NEED TO SIT THERE AND EXPLAIN TO YOU AND YOUR VIEWERS AND TO ME HOW HIGHER RATES LEADS TO MORE AND FASTER ECONOMIC GROWTH. I JUST DON'T SEE IT.
KASHKARI ON HIS PREFERENCE
MY PREFERENCE WOULD BE THAT WE START TO – WE FIRST ARTICULATE A PLAN OF EXACTLY WHEN AND HOW WE'RE GOING TO ROLL OFF THE BALANCE SHEET AND THEN WE ALLOW THE MARKETS TO REACT TO THAT PLAN, ABSORB THAT INFORMATION. THEN AS WE MOVE FORWARD, WE ALLOW THE BALANCE SHEETS TO START RUNNING OFF AND THEN WE CAN RETURN TO FED FUND RATE HIKES WHEN THE DATA CALL FOR IT.
KASHKARI ON LETTING THE MARKETS ADJUST
IF YOU THINK ABOUT THE TECH BUBBLE. THE TECH BUBBLE BURST. IT WAS NOT GOOD FOR THE ECONOMY. OBVIOUSLY IT HURT. BUT THERE WAS NO RISK OF A FINANCIAL COLLAPSE. NOT LIKE THE HOUSING BUBBLE. SO THE DIFFERENCE IS THE HOUSING MARKET HAS SO MUCH DEBT UNDERNEATH IT, IT'S MUCH MORE DANGEROUS IF THERE'S A CORRECTION. IF EQUITY MARKETS DROP, IT'S GOING TO BE PAINFUL FOR INVESTORS, BUT THERE'S SO LITTLE DEBT RELATIVE TO HOUSING, IT DOESN'T LOOK LIKE IT HAS A RISK OF LEADING TO ANY KIND OF FINANCIAL CRISIS. SO OUR JOB IS LET THE MARKETS ADJUST.
KASHKARI ON CONTINUING AS IS
IF WE'RE COMING SHORT ON INFLATION AND THE JOB MARKET SHOWS MORE SIGNS OF SLACK, MY QUESTION IS WHY DO ANYTHING? WHY NOT ALLOW THIS TO CONTINUE UNTIL WE SEE THAT WE'RE ACTUALLY REACHING MAXIMUM EMPLOYMENT.
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