Minneapolis Fed President says prolonged inflation above 2% target may force more aggressive monetary policy to prevent expectations from drifting.
Minneapolis Federal Reserve President Neel Kashkari stated inflation remains his top priority, calling current levels “much too high” after five years above the Fed’s 2% target. He warned that persistent inflation risks unanchoring consumer expectations, which could necessitate a stronger policy response to stabilize prices.
US headline inflation stood at 3.8% in April, with core CPI rising 0.4% month-over-month and 2.8% annually. Kashkari cited energy and fertilizer costs, along with global shocks like the Ukraine war and Iran conflict, as key drivers of price pressures. The labor market’s strength allows the Fed to focus on inflation without immediate growth concerns.
Kashkari emphasized the Fed has “no choice” but to maintain pressure on inflation, signaling potential further tightening if price trends do not ease. The remarks underscore the central bank’s resolve to avoid a prolonged inflationary cycle.