Minneapolis Fed President warns inflation remains too high and geopolitical risks could prolong price pressures.
Minneapolis Fed President Neel Kashkari stated inflation remains too high and the Fed must return to its 2% target without adjusting the goalpost. Recent geopolitical tensions, including the Strait of Hormuz closure, pose significant inflationary risks that complicate policy decisions.
Before the Iran conflict escalated, Kashkari had growing confidence inflation was trending toward 2%. The labor market shows modest strength but remains ‘lukewarm,’ with limited impact expected from Fed rate decisions on mortgage rates. Inflationary shocks do not absolve the Fed of its mandate but have made progress more challenging.
The US dollar strengthened against major currencies, with the strongest gains against the New Zealand dollar. Markets continue to assess the Fed’s policy path amid persistent inflation concerns and external risks.