Fed’s Kashkari says the Iran war raises inflation risks and may force rate hikes, adding the Fed cannot signal cuts are coming while the Hormuz strait remains closed.
Fed’s Kashkari says the Iran war raises inflation risks and may force rate hikes, adding the Fed cannot signal cuts are coming while the Hormuz strait remains closed. Summary: Minneapolis Fed President Neel Kashkari said Sunday that a prolonged Iran conflict increases inflation risks and economic damage, limiting the Fed’s ability to provide clear rate guidance, according to his appearance on CBS’s Face the Nation Kashkari said he could not signal rate cuts were forthcoming and raised the possibility of moving rates higher, citing uncertainty around all aspects of the war, per CBS Face the Nation The Strait of Hormuz, closed since US and Israeli airstrikes on Iran on February 28, handles around 20% of global oil and gas supplies, according to both sources Kashkari was among an unusually large group of dissenters at the most recent FOMC meeting, voting against the language in the monetary policy statement, per both reports The Fed held its rate target range at 3.5% to 3.75% at the latest meeting, retaining language indicating the next move was expected to be a cut, according to the first source Dissenters from the Cleveland, Dallas and Minneapolis regional Fed banks favoured holding rates and leaving the direction open, while Fed Governor Stephen Miran dissented in favour of a cut, per the first source BlackRock’s Rosenberg flagged that the Fed is likely to remain divided for a prolonged period, according to the second source Federal Reserve Bank of Minneapolis President Neel Kashkari said on Sunday that the ongoing war between the United States and Iran is raising the risk of sustained inflation and broader economic damage, and that the uncertainty surrounding the conflict makes it impossible for the central bank to offer clear signals on the direction of interest rates.
Speaking on CBS’s Face the Nation, Kashkari said he was closely focused on the war’s effects on both inflation and economic demand, particularly given the continued closure of the Strait of…