The strong November jobs report released Friday is evidence that the Federal Reserve has set interest rates correctly, former top Federal Reserve official Donald Kohn told CNBC.
"If anything it reinforces their judgment that they've got policy in a good place ... to support the continued good growth in the economy with very contained inflation," Kohn, a former vice chairman of the Federal Reserve Board, said Friday on "Closing Bell."
The Labor Department reported Friday that the U.S. economy added 266,000 jobs last month, significantly eclipsing estimates of 187,000 from economists polled by Dow Jones. The unemployment rate dropped back to 3.5%, equaling a mark earlier this year that was, at the time, the lowest since 1969.
The Fed has cut interest rates three times this year, the most recent of which came in October, and lowered its benchmark funds rate by 25 basis points to a range of 1.5% to 1.75%.
Fed Chairman Jerome Powell indicated then that the central bank was likely pausing its period of monetary easing. Fed officials have generally described the U.S. economy as strong, powered by robust consumer spending, despite external pressures such as the U.S.-China trade war and uncertainty around the United Kingdom's departure from the European Union.
President Donald Trump, however, has continued to criticize Powell's handling of interest rates, arguing that the Fed should lower them further to make the U.S. more competitive in a global market where some countries have negative rates.
Trump appointed Powell to lead the Fed, whose Federal Open Market Committee meets next week. It is widely expected to leave rates unchanged.
"They certainly don't need to ease to help the labor market. It's doing great all by itself," said Kohn, who was vice chairman between 2006 and 2010.
Assuming no major economic event, Kohn said he expects the Fed to keep interest rates steady for the next year, arguing that would keep the economy in "decent shape." If anything, he said, the next adjustment to rates would more likely be raising them by 25 basis points if inflation begins to pick up.
But, Kohn said, "Right now it looks like it's a ways away."
