Fed's Kashkari reportedly says inflation is still too high across the U.S. economy
"So even if we strip out energy, which is really volatile, and strip out food ... inflation is still too high," Kashkari told Fox News.
Minneapolis Federal Reserve President Neel Kashkari stated on Sunday that inflation remains excessively high across various sectors of the US economy, not solely driven by soaring oil prices. Even excluding energy and food, which are notoriously erratic, Kashkari believes the economy's trajectory is adversely affected by elevated inflation.
During an interview on Fox News Sunday Morning Futures, Kashkari endorsed the unanimous decision to raise interest rates by a quarter percentage point, increasing the rate from 3.75%-4.00%. He was among three officials who dissented from the Federal Open Market Committee's (FOMC) previous meeting, advocating for an increase when the majority opted to maintain rates steady.
The recent escalation in tensions between the US and Iran, culminating in attacks on oil tankers in the Strait of Hormuz and the shutdown of Saudi Arabia's crucial East-West pipeline, has significantly contributed to the surge in crude oil prices. Despite these geopolitical developments, Kashkari emphasized that the Federal Reserve's mandate to reduce inflation to a 2% target remains unchanged.
He noted that there is no way to influence oil prices or open the Strait of Hormuz through interest rate adjustments. Kashkari further explained that the inflation felt by American consumers is widespread, impacting services and other sectors of the economy significantly.
He expressed optimism that additional support from other government entities or sectors of the real economy might alleviate inflationary pressures. Kashkari's apprehensions regarding inflation align closely with those of Federal Reserve Chair Kevin Warsh, who was quoted following the latest rate-setting meeting. Warsh estimated inflation to be around 3.6% in August, a figure that will be officially disclosed later this month.
He echoed Kashkari's concerns, stating that multiple categories are still registering increases exceeding 3% over both six and twelve-month periods.
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