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Minneapolis Fed President Neel Kashkari defended his dissent at last week's FOMC meeting, arguing that the central bank should begin raising interest rates gradually rather than risk falling behind inflation. Speaking to CNBC from the Aspen Ideas Festival, Kashkari said he was not advocating aggressive tightening but believed the Fed should "start slowly moving up as we get more data in." He was one of three policymakers who voted for a 25-basis-point rate hike, while the majority opted to keep the federal funds rate unchanged at 3.50%-3.75%.

Kashkari's central argument was that current monetary policy has yet to become meaningfully restrictive. "I don't see evidence monetary policy is particularly restrictive right now," he said, pointing to robust corporate earnings, resilient consumer spending and a labor market that continues to hold up well. While acknowledging that June inflation showed some improvement as oil prices temporarily retreated, he warned that persistent supply shocks continue to threaten the inflation outlook. "We have more work to do to get inflation back down," he said, adding that he would "rather get going now in small steps than wait till later" and risk having to raise rates much more aggressively.

His remarks sharpen the contrast within the Federal Reserve following last week's meeting. Just a day earlier, Philadelphia Fed President Anna Paulson argued policy was already "mildly restrictive" and supported holding rates steady while assessing incoming data. Kashkari stopped short of explicitly calling for a September hike, stressing that future decisions would depend on economic data. He also revealed that Fed Chair Kevin Warsh encouraged independent judgment, recalling that Warsh told him to "do what you think is the right thing to do for the economy.

Key Takeaways

• Minneapolis Fed President Neel Kashkari argued the Fed should begin raising rates gradually rather than risk falling behind inflation and being forced into larger hikes later.
• Kashkari believes current monetary policy is not sufficiently restrictive, citing strong corporate earnings, resilient consumer spending and a still-solid labour market.
• Despite some improvement in June inflation, he warned that supply-side inflation risks remain, saying the Fed still has "more work to do" to return inflation to its 2% target.
• Kashkari did not explicitly endorse a September rate hike, emphasizing that upcoming economic data will determine the appropriate policy path.
• His comments highlight the growing divide within the FOMC, contrasting with Philadelphia Fed President Anna Paulson's view that policy is already "mildly restrictive."
• Kashkari also said Fed Chair Kevin Warsh encouraged independent judgment, suggesting an open policy debate despite the unusual three dissents at last week's meeting.

US private-sector hiring slowed more sharply than expected in July. The ADP National Employment Report showed private employment increased by 44k, well below the 75k consensus forecast and down from a revised 95k in June. Hiring remained concentrated in the service sector, which added 47k jobs, while goods-producing industries shed 3k, leaving overall employment growth at its weakest pace in recent months.

The softer headline, however, was accompanied by continued resilience in wages. Annual pay growth for workers who stayed with their employers held steady at 4.4%, while wage growth for job changers accelerated to 7.0%, the strongest since August 2025.

ADP Chief Economist Nela Richardson noted that stronger pay gains for job changers suggest labour shortages persist in parts of the economy even as employers adjust hiring plans to shifting macroeconomic conditions.

Data Summary

Key Takeaways

• US private employment rose by just 44k in July, well below the 75k consensus forecast and down from a revised 95k in June, pointing to slower hiring momentum.
• Employment growth remained concentrated in the services sector (+47k), while goods-producing industries lost 3k jobs.
• Hiring was positive across businesses of all sizes, with small firms accounting for more than half of July's job gains.
• Wage growth remained resilient. Pay for job stayers held steady at 4.4%, while job changers saw pay growth accelerate to 7.0%, the strongest since August 2025.
• ADP said stronger wage gains for job changers suggest labour shortages persist in parts of the economy, even as employers become more cautious about hiring.
• The report reinforces the picture of a cooling—but not collapsing—labour market, keeping attention firmly on Friday's official nonfarm payrolls report for confirmation.

Full US ADP employment release here.

Eurozone producer prices fell in June as lower energy costs outweighed continued increases across most other industrial sectors, suggesting pipeline inflation eased but remained far from disappearing. Industrial producer prices declined -0.3% m/m, matching expectations and reversing May's 0.2% increase, while the annual rate slowed from 5.9% to 4.6%. The figures largely reflected the period of lower oil prices during June before renewed volatility in energy markets emerged in July.

The decline was driven almost entirely by the energy sector, where producer prices dropped -1.5% m/m. By contrast, underlying price pressures remained positive across much of the industrial economy. Intermediate goods prices rose 0.3%, while capital goods and durable consumer goods each increased 0.2%. Excluding energy, producer prices actually rose 0.2%, indicating that manufacturing cost pressures continued to build despite the headline decline.

The data broadly reinforce the message from this week's PMI surveys that inflation pressures are moderating. Slower producer price growth should offer some reassurance for the ECB, but the persistence of positive ex-energy inflation suggests underlying pricing power remains intact. With oil prices having rebounded after June before easing again this week on renewed hopes of a Strait of Hormuz agreement, policymakers are likely to view the report as evidence of gradual disinflation rather than a decisive turning point.

Data Summary

Key Takeaways

• Eurozone producer prices fell 0.3% m/m in June, exactly in line with expectations, while annual producer inflation slowed to 4.6% from 5.9%.
• The decline was almost entirely driven by a 1.5% fall in energy prices, reflecting the period of lower oil prices during June.
• Underlying pipeline inflation remained intact. Producer prices excluding energy rose 0.2%, while intermediate goods, capital goods and durable consumer goods all recorded monthly increases.
• The report reinforces this week's PMI surveys, which also showed easing—but not disappearing—cost pressures across the Eurozone.
• As the data predate July's renewed volatility in oil markets, policymakers are likely to treat the report as backward-looking while continuing to monitor the impact of recent geopolitical developments on energy prices.
• Overall, the release supports the view of gradual disinflation rather than a collapse in producer price pressures, leaving the ECB room to remain patient.

Full Eurozone PPI release here.