On Wednesday, Neel Kashkari of the Minneapolis Federal Reserve expressed doubt to CNBC regarding if interest rates have been raised enough to manage inflation. He pointed to numerous worries, saying that "we could be less stringent than we'd otherwise anticipate."
Neel Kashkari, President of the Minneapolis Federal Reserve, expressed uncertainty on Wednesday whether the central bank's raising of interest rates had already gone far enough to bring down inflation. He suggested in an essay the day before that rates may need to go "meaningfully higher" from their present level of 5.25%-5.5%. With regards to the neutral rate of interest which neither hinders nor furthers the economy, Kashkari said it was "possible" this had risen.
He went on to say that consumer spending and GDP growth remain robust while sectors usually affected by rate hikes, such as autos and housing, have showed signs of bottoming, hinting that the Fed might not be as restrictive as it thinks.
The Federal Open Market Committee, of which Kashkari is a voting member this year, chose to keep rates the same last week while decreasing its outlook for next year. Wall Street has feared that the continuous tightening of monetary policy could cause a recession.
Kashkari argued that the Fed's aim is not to bring about an economic slump. He offered that the need for higher rates may merely mean the "economic flywheel is spinning" and economic fundamentals are stronger than he initially estimated, so the aim is to get inflation back to its 2% goal. Ultimately, he expressed that there is no certainty regarding whether this has already been achieved.
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