Minneapolis Fed backs rate increase as Kashkari warns inflation remains broad-based in U.S. economy
Persistent price pressures remain a central concern for U.S. monetary policy after the Federal Reserve raised interest rates last week. Minneapolis Federal Reserve President Neel Kashkari says inflation is still too high across the economy, even when volatile food and energy categories are excluded.
Highlights
- Kashkari states persistent U.S. inflation remains broad-based, not limited to oil prices, and elevated even after excluding food and energy.
- The Federal Reserve raised rates by a quarter percentage point last week, lifting the target range to 3.75% to 4.00%.
- Kashkari, who previously dissented for a hike when rates were left unchanged, reinforces support for tighter policy to address underlying inflation.
Policy stance after latest rate move
As reported by Reuters, Kashkari says on Sunday in a Fox News interview that inflation is not limited to oil prices and continues to affect a wide range of the U.S. economy.He says underlying inflation remains too high even after stripping out energy and food, which he describes as important but volatile categories. Kashkari adds that the Fed will do its part and hopes other sectors of the economy will provide help as conditions return to normal.
Implications for the Federal Reserve outlook
Kashkari supports the unanimous vote last week to raise interest rates by a quarter percentage point, bringing the target range to 3.75% to 4.00%. His comments reinforce the Fed's focus on persistent inflation pressures beyond commodity-driven costs.At the prior Federal Open Market Committee meeting, Kashkari is one of three officials who dissent in favor of a rate increase when the majority leaves rates unchanged. That position underscores his preference for tighter policy as the central bank seeks to curb inflation across the broader economy.
In our earlier article on Bank of America’s hawkish Fed rate outlook for 2026, we discussed why the bank expected a longer tightening cycle than markets were pricing in, citing sticky inflation and a resilient economy. We also noted how a higher-for-longer stance could influence Treasury yields and investor positioning as policymakers signaled they may keep tightening until inflation clearly cools.
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