Federal Reserve Bank of Minneapolis President Neel Kashkari said there’s been positive action on controlling US inflation, but it’s still higher than policymakers are prepared to tolerate.
(Bloomberg) — Federal Reserve Bank of Minneapolis President Neel Kashkari said there’s been positive action on controlling US inflation, but it’s still higher than policymakers are prepared to tolerate.
“Right now inflation is coming down — we’ve made some good progress,” Kashkari said Tuesday at a conference in Minneapolis. “It’s still too high.”
“I want to see convincing evidence that inflation is well on its way back down to 2%, and then we can allow it some time to run,” Kashkari said. “We don’t need to get there tomorrow, we can allow it to gradually get there over time.”
Kashkari, a voter on monetary policy this year, said he’s “been surprised that the economy has been very resilient” and that the labor market “has remained very strong” in the face of the Fed’s aggressive rate-hike campaign to ease inflation.
“It’s a little bit of a double-edged sword, because the question in my mind is, ‘have we done enough to actually get inflation all the way back down to our 2% mark, or do we have to do more’,” he said.
Policymakers delivered a quarter-point hike at their meeting last month, bringing the federal funds rate to a range of 5.25% to 5.5%. That increase came after a pause at the June meeting, where officials simultaneously signaled that two further increases might be necessary this year.
The US central bank has been raising rates in an attempt to slow inflation that in 2022 reached a 40-year high. Price growth has cooled substantially since then, but still remains well above the Fed’s 2% annual target rate.
“Are we done raising rates? I’m not ready to say that we’re done,” Kashkari said. “But I’m seeing positive signs that say, hey, we may be on our way — we can take a little bit more time to see, get some more data and before we decide whether we need to do more.”
While a report last week showed that inflation continued to moderate in July, with prices excluding those for food and energy posting the smallest back-to back increases in more than two years, robust retail-sales data Tuesday showed that US consumers continue to be resilient.
Officials have said that they’re carefully assessing incoming data as they craft policy. They will meet again Sept. 19-20 to decide on rates.
(Updates with more comment from Kashkari in third paragraph.)
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