Federal Reserve Bank of Minneapolis President Neel Kashkari said policymakers may need to keep interest rates high for longer if inflation becomes entrenched, which would create more stress in the banking sector.
(Bloomberg) — Federal Reserve Bank of Minneapolis President Neel Kashkari said policymakers may need to keep interest rates high for longer if inflation becomes entrenched, which would create more stress in the banking sector.
“If inflation stays high, if inflation became more entrenched than we realized then we’re going to have to keep interest rates high for longer and that’s going to increase the pressures on the banking sector,” Kashkari said Tuesday in an interview on CNN.
He repeated that even if the Fed were to pause tightening at its June 13-14 meeting, it may need to raise rates further at later gatherings, depending on the strength of incoming data.
The US central bank has raised rates quickly over the past 14 months, bringing the federal funds rate to a range of 5% to 5.25% as it tries to cool inflation.
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