Minneapolis Fed President Neel Kashkari said inflation across the US economy remains too high, even after stripping out oil-driven cost gains, in a Sunday Fox News interview. His comments echoed Fed Chairman Kevin Warsh, who has flagged persistent price pressure above 3% following last week's rate hike to 3.75%-4.00%.
Minneapolis Federal Reserve President Neel Kashkari said Sunday that US inflation is still too high across the economy, not only because of the recent surge in oil prices. Kashkari made the comments in an interview with Fox News' Sunday Morning Futures, arguing that inflation remains elevated even when volatile food and energy costs are stripped out.
Oil shock, but rates can't fix it
Crude prices have soared after the US and Iran attacked and sank oil tankers in the Strait of Hormuz, while Saudi Arabia closed its main East-West pipeline following aerial attacks in the widening Middle East war. Kashkari said the Fed's job is to bring inflation back to its 2% target, but interest rates cannot reopen the strait or lower oil prices.
According to Reuters: "It's in all aspects of the economy." Kashkari said the services sector shows broad price pressure that the Fed does have tools to address.
Kashkari backed last week's rate hike
Kashkari supported the unanimous vote last week to raise interest rates by a quarter percentage point to 3.75%-4.00%. He had been one of three officials who dissented at the Fed's prior meeting in favor of a rate hike, when the majority of the Federal Open Market Committee opted to leave rates unchanged.
Fed chair Warsh flags the same pressure
His concerns echoed Fed Chairman Kevin Warsh, who estimated the Fed's preferred inflation gauge likely ran around 3.6% in August, a figure due for official release later this month. Warsh said too many categories are still posting increases above 3%, on both a 6- and 12-month basis.
He said he hopes for help from other parts of government or the broader economy.
Source: Investing.com
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