Fed’s Kashkari: Inflation Is Still Too High in ‘All Aspects’ of U.S. Economy

Inflation is too high across all aspects of the U.S. economy, not just rising oil prices, Minneapolis Federal Reserve President Neel Kashkari said in an interview on Sunday, Reuters reported.

“So even if we strip out energy, which is really volatile, and strip out food — they matter a lot — but in terms of where the economy is going, inflation is still too high,” Kashkari told Fox News.

Kashkari supported the unanimous vote last ​week to raise interest rates by a quarter percentage point to 3.75%-4.00%.

He was among three officials who dissented ​at the Fed’s prior meeting for a hike when the majority of the Federal Open Market Committee opted to leave rates unchanged.

Reuters reported that projections released along with the rate-hike decision showed all but two Fed policymakers see at least ​one more quarter-point increase this year.

Oil Prices Soared

Crude oil prices rose sharply after hostilities intensified, with the U.S. and Iran attacking and sinking some oil tankers in the Strait of Hormuz and Saudi Arabia closing its important ​East-West pipeline because of aerial attacks in the widening Middle East war.

The Fed is tasked with getting inflation back down to its 2% target, Kashkari said, and there is nothing it can do with interest rates that might result in opening up the Strait of Hormuz ‌or bringing down oil prices.

“The inflation that the American people are feeling every day is much beyond just oil prices. It’s in all aspects of the economy. It’s in the services sector, for example, widely. So we have tools to bring that back down,” Kashkari said. “Hopefully, we’ll get some help from other parts of government or other parts of the real economy.”

Reuters noted that Kashkari’s inflation concerns largely echoed those ​voiced by Fed Chairman Kevin Warsh ​after the conclusion of the latest rate-setting meeting on Wednesday. Warsh estimated that inflation as measured by the gauge the Fed uses to set its 2% target was likely around 3.6% in August. That figure will not be ​released officially until later this month.

“Too many categories are still posting increases above 3 percent, on both ​a six- and 12-month basis,” Warsh said at his press conference following the Fed meeting.

Economic Growth

Kashkari also said economic growth has been quite strong, even with the tariff and trade war and the conflicts in Ukraine and Iran.

“Despite that, the U.S. economy has been growing at a good clip, ​and productivity is showing some signs of improving. And so my hope is, as ​some of those conflicts go to the background, that the growth can really take over and hopefully bring inflation down. Hopefully, disinflation can take over, which will make the ​Fed’s job a lot easier.”