Minneapolis Fed President Neel Kashkari says the central bank's ultimate terminal rate remains uncertain even as it stays committed to restoring price stability. His remarks come a month after officials raised rates for the first time in roughly three years, and follow an inflation report that showed underlying price growth cooling less than some expected.
Kashkari says the Fed must do whatever it takes
Federal Reserve Bank of Minneapolis President Neel Kashkari said Thursday the central bank remains committed to restoring price stability, even though the rate needed to tame inflation is still unclear. Speaking in a Bloomberg Television interview, he said policymakers must take whatever actions are required to bring inflation back to its 2% target after five years of persistent supply shocks.
His comments follow a unanimous vote by Fed officials last month to raise the benchmark interest rate for the first time in roughly three years. Post-meeting projections signaled at least one more increase before year-end, and recent data and policymaker comments have kept the debate over the Fed's near-term path alive.
Market bets ease, then hold
Expectations for an immediate hike at the Fed's October meeting eased earlier this week after New York Fed President John Williams indicated no urgency for further tightening. That view gained support from Wednesday's inflation report, which showed a key measure of underlying price growth rising less than anticipated last month.
Even so, futures markets continue to price in one final quarter-point hike before the end of the year. Kashkari has favored a more aggressive stance than some colleagues: he dissented alongside two other officials against July's decision to pause rate hikes, preferring a quarter-point increase instead.
The Minneapolis Fed chief has previously said elevated price pressures demand continued vigilance, though he has expressed hope that modest policy adjustments could ultimately be enough. Investors now weigh signs of cooling inflation against Kashkari's insistence that higher rates remain on the table.
Source: Investing.com
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