Fed's Kashkari says officials should consider yield-curve control as a potential tool

Oct 11 (Reuters) - Minneapolis Federal Reserve Bank President Neel Kashkari on Friday said the U.S. central bank should look into controlling the yield curve as a potential tool for monetary policy, similar to an approach used by the Bank of Japan.

Kashkari echoed an idea mentioned by Fed Chair Jerome Powell earlier this week that policymakers may want to consider short-term yield curve control.

"It’s worth analyzing the potential of yield curve control as yet another policy tool," Kashkari said in New York during an event at the Council on Foreign Relations.

He said the U.S. central bank may not want to target yields on 10-year notes the way the Bank of Japan does. "Even if we tried to control the first couple of years of the yield curve that could be another tool in the Fed’s arsenal," Kashkari said. "It’s complicated, it’s not without risk but I think it’s interesting and worth studying."

Kashkari was not as open to the idea of negative interest rates, another monetary policy tool used by the Bank of Japan. He said the Fed would turn to rate cuts and quantitative easing to stimulate the economy before it turned to negative rates.

Kashkari repeated his views that U.S. interest rates should be lower to bolster the economy and help bring more people into the labor market and lift wages.

Fed officials are divided on whether the U.S. central bank should continue to reduce rates. The September rate cut, which brought the benchmark overnight lending rate to a range of 1.75% to 2.00% was passed with a 7-3 vote.

Investors widely expect the Fed to cut interest rates again when it meets on Oct. 29-30. Kashkari does not vote on policy this year but he will become a voting member next year as part of the Fed's rotation. (Reporting by Jonnelle Marte Editing by Chris Reese)