Kashkari says inflation fight top priority as labor market ‘in decent shape’
11 reported
Minneapolis Federal Reserve President Neel Kashkari stated Thursday that reducing 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 Fed would maintain a balanced approach to its dual mandate of price stability and full employment. He noted that inflation has exceeded the Fed's 2% target for over five years, while the labor market is currently in "decent shape." Kashkari warned that prolonged high inflation risks unanchoring inflation expectations, which could require more aggressive policy responses. He attributed global inflationary pressures to the Covid-19 pandemic, tariffs, the war in Ukraine, and the conflict in Iran. Kashkari also discussed artificial intelligence, saying its long-term impact on monetary policy is still too soon to know. His remarks come as the Fed begins a new chapter under Chair Kevin Warsh, who succeeded Jerome Powell.
What’s reported
Kashkari said bringing down inflation is his top priority, calling consumer prices "much too high."
He stated the Fed is taking a "balanced approach" to its dual mandate of price stability and full employment.
Inflation has remained above the Fed's 2% target for more than five years.
The labor market is in "decent shape," according to Kashkari.
Kashkari warned that if inflation expectations become unanchored, the Fed would need to respond "even more aggressively."
U.S. headline inflation stood at 3.8% in April; core CPI excluding food and energy increased 0.4% and 2.8%, respectively.
Kashkari attributed global inflationary pressures to the Covid-19 pandemic, tariffs, the war in Ukraine, and the conflict in Iran.
He said the current inflation surge is driven by energy and fertilizer prices.
Kashkari stated that if AI leads to sustained higher productivity, higher rates could be sustained, but the impact is hard to judge now.
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
