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Fed’s Kashkari: biggest fear is inflation will be more persistent

Fed's Kashkari: biggest fear is inflation will be more persistent thumbnail

President of the Federal Reserve Bank on Minneapolis Neel Kashkari listens to a question during an interview in New York, U.S., March 29, 2019. REUTERS/Shannon Stapleton

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Aug 23 (Reuters) – Minneapolis Federal Reserve Bank President Neel Kashkari said on Tuesday his biggest fear is that the Fed and financial markets are underestimating underlying inflation pressures, and beating inflation will require even more aggressive rate hikes than he currently expects.

Kashkari is already the most hawkish of all the central bank’s 19 policymakers, and expects the Fed to need to lift its policy rate, now at 2.25%-2.5%, another two full percentage points by the end of next year. He would want to see “compelling” evidence that inflation is falling towards the Fed’s 2% target before easing up on rate hikes, he said.

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Reporting by Ann Saphir; Editing by Jacqueline Wong

Our Standards: The Thomson Reuters Trust Principles.

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