Fed’s Kashkari questions policy tightness as economy stays strong
Minneapolis Fed President Neel Kashkari said, “Inflation is still too high, about 3%, new data doesn't alter outlook,” he said at a Q&A at the Council on Foreign Relations.
Minneapolis Fed President Neel Kashkari expressed concerns about the tightness of monetary policy despite the economy remaining strong. He stated that inflation is still too high, currently around 3%, and that new data does not significantly alter the outlook. Kashkari acknowledged that the economy continues to be robust, with households persistently spending and job seekers securing positions.
He further suggested that the longer the economy remains strong, the more he questions the level of monetary policy tightness that is necessary. Kashkari anticipated an additional rate increase this year and another in 2027. He believed that the neutral rate, the target rate where inflation is at its desired level, could be higher than currently anticipated.
Kashkari emphasized that one should not blindly follow market trends but remain attentive to its signals. He expected the Federal Reserve (Fed) to refrain from taking drastic measures to reduce inflation, opting instead for more restrained actions. Kashkari believed that the current economic crisis primarily affects the tech sector, particularly artificial intelligence (AI), and he remained optimistic that the central bank could successfully manage inflation without causing significant economic strain.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
