Kashkari says inflation fight top priority, labor market in ‘decent shape’
9 reported
Minneapolis Federal Reserve President Neel Kashkari stated Thursday that reducing U.S. inflation remains his top priority, describing consumer prices as "much too high." Speaking to CNBC at the Bank of Japan-IMES Conference, Kashkari said the central bank would maintain a "balanced approach" to its dual mandate of price stability and full employment. He noted that inflation has stayed above the Fed's 2% target for over five years, while the labor market is currently in "decent shape." Kashkari warned that prolonged elevated inflation risks unanchoring inflation expectations, which could require a more aggressive policy response. He attributed global inflationary pressures to the Covid-19 pandemic, tariffs, the war in Ukraine, and the conflict in Iran, with current surges driven by energy and fertilizer prices. On artificial intelligence, Kashkari said that if AI leads to sustained higher productivity, higher interest rates could be sustained, but its impact remains too soon to judge. The remarks come as the Fed begins a new chapter under Chair Kevin Warsh, who succeeded Jerome Powell, and Kashkari welcomed a fresh discussion on the Fed's communication tools, including the "dot plot."
What’s reported
Kashkari said bringing down inflation is his top priority, calling consumer prices "much too high."
Inflation has remained above the Fed's 2% target for more than five years.
The labor market is in "decent shape," according to Kashkari.
U.S. headline inflation stood at 3.8% in April; core CPI (excluding food and energy) increased 0.4% and 2.8%.
Kashkari attributed global inflationary pressures to the Covid-19 pandemic, tariffs, the war in Ukraine, and the conflict in Iran.
He said the current surge is driven by energy and fertilizer prices.
On AI, Kashkari said if it leads to sustained higher productivity, higher rates could be sustained, but the impact is too soon to know.
The Fed is under new Chair Kevin Warsh, who succeeded Jerome Powell.
Kashkari said he does not "love" filling out the dot plot because the future is uncertain, and welcomed a fresh discussion on Fed communication.
Key figures
Neel Kashkari, Minneapolis Federal Reserve President
Kaori Enjoji, CNBC correspondent
Kevin Warsh, Federal Reserve Chair
Jerome Powell, former Federal Reserve Chair
Sources: CNBC
