In an interview with CNBC, Minneapolis Fed President Neel Kashkari acknowledged the uncertainty surrounding the decision whether to raise rates further in June. He highlighted, “I think right now it’s a close call, either way, versus raising another time in June or skipping. What’s important to me is not signaling that we’re done.”
Kashkari clarified that even if the Federal Reserve opted not to hike rates in June, it wouldn’t signal the end of the current tightening cycle. Instead, it would be a strategic move to gather more information and potentially reinitiate the raise in July.
Considering his tenure on the committee, which spans “seven or eight years”, Kashkari conceded that this period marks the highest degree of uncertainty they’ve faced in terms of comprehending the underlying inflationary dynamics. Consequently, he is placing a greater emphasis on inflation to guide his decisions.
He speculated, “It may be that we need to go north of 6%, let’s see what happens in the underlying services economy.” Yet, Kashkari is mindful of the potential impact of banking stress on inflation rates.
“But if the banking stresses start to bring inflation down for us, then maybe we’re getting closer to being done. I just don’t know right now,” he added.
