Fed's Kashkari says Reddit-driven stock gains don't merit a policy response, and if investors lose money then 'that's on them'
- Regional Fed president Neel Kashkari says the Reddit trading frenzy doesn't merit a policy response.
- He said if two groups of speculators wish to bid on a single stock over speculation, "God bless them."
- The dovish central banker said he is "not at all" thinking about changing his stance on monetary policy.
Minneapolis Federal Reserve President Neel Kashkari said Monday that the recent trading frenzy in GameStop and other Reddit-touted stocks does not merit a monetary policy response, Boomberg reported.
Addressing the attention on the explosive rally in GameStop shares, the central banker said if two groups of speculators want to battle it out over an individual stock, "God bless them."
"That's for them to do, and if they make money, fine. And if they lose money, that's on them," Bloomberg reported Kashkari saying at a virtual town hall event. "I'm not at all thinking about modifying my views on monetary policy because of speculators in these individual stocks."
GameStop shares plunged 23% on Monday, after seeing a 1,600% rally in January. Scores of day traders on Reddit had driven its shares higher in defiance of bearish hedge funds and investing norms.
Kashkari is one of the more dovish members of the Federal Open Market Committee, which sets US monetary policy. Dovish policymakers tend to favor looser, more accommodating economic policy in order to stimulate growth within the economy, as opposed to so-called hawkish members.
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"The key now is for the Federal Reserve to keep our foot on the monetary-policy gas until we really have achieved maximum employment," he said. The central bank is currently buying $120 billion worth of Treasurys and mortgage-backed securities at a monthly pace to ease market functioning, while its benchmark interest rate remains near zero to encourage borrowing.
Fed chairman Jerome Powell has exhibited a similar stance. He declined to comment on GameStop's dizzying rise and said changing monetary policy to wave away asset bubbles wouldn't be his first choice, Reuters reported.
"We don't really think we'd be successful in every case in picking the exact right time to intervene in markets," Powell said.
Separately, Bloomberg reported San Francisco Fed President Mary Daly saying on January 29 that she was against tightening monetary so that some people who already own wealth from stock markets don't get more.