Kashkari warns inflation remains elevated despite recent rate hike
Federal Reserve Governor Neel Kashkari said inflation is still too high across the economy, even after the latest quarter-point rate increase.
In a recent interview, Federal Reserve Governor Neel Kashkari emphasized that inflation remains too high across the United States, even after stripping out volatile energy and food items. He supported the Federal Open Market Committee's unanimous vote to increase the benchmark interest rate by a quarter point. Kashkari pointed out that the Fed's tools cannot directly address soaring crude prices, which have climbed as hostilities intensify in the Strait of Hormuz and Saudi Arabia's pipeline faces aerial attacks.
He urged that other branches of government and the real economy provide complementary assistance to bring inflation down. Kashkari's concerns mirrored those of Fed Chairman Kevin Warsh, who said many price categories are still rising above 3% on both six- and twelve-month bases. Both officials reaffirmed the Fed's commitment to achieving the 2% inflation goal.
Why it matters
Persistently high inflation affects consumer purchasing power and guides future monetary policy decisions.
How this story developed
- Sep 16 Fed lifts policy rate for first time in over three years under new chair
- Sep 16 The Fed announced a quarter‑point increase to its key interest rate.
- Sep 17 In its first rate increase since 2023, the Fed lifted the policy rate by a quarter point to a 3.75-4.00% range, with every governor supporting the decision. Market participants interpret the action as a more hawkish stance, prompting concerns for rate-sensitive assets such as small-cap stocks. The lack of clear forward guidance from new chair Kevin Warsh adds to uncertainty, while forecasts point to at least one additional hike this year and a pause in 2027.
- Sep 17 Fed increased the federal funds rate by 25 basis points to a 3.75‑4 percent target range in its first hike since 2023, with a 12‑0 vote.
- Sep 17 The Bank of Japan will raise its policy rate to 1.25% on Friday, the highest level in 31 years, as it seeks to counter rising inflation and a weakening yen.
- Sep 18 Fed officials indicated that at least one more 0.25‑point rate increase may be implemented before year‑end.
- Sep 18 The BoJ is scheduled to raise its policy rate to 1.25% on Friday.
- Sep 20 The Fed implemented a modest rate increase and a hawkish tone from the new chair.
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