MNI BRIEF: Kashkari Says Fed Needs To Keep Eye On Inflation

Federal Reserve Bank of Minneapolis President Neel Kashkari on Wednesday said inflation is still too high and he is not yet in the camp that tariff-driven inflation will be a short-term phenomenon, pitting himself against others who have argued that tariffs will have a one-time impact. 

"Inflation is still too high, but at the same time, the labor market is showing some signs of cooling, so we're getting into a tricky position now," he said in a Q&A hosted by the Minnesota Women’s Economic Roundtable. "There are theories why it [inflation] should be transitory, temporary, and there are theories why it might be more persistent, and so I'm in the camp of, 'hey, we need to kind of watch this before we reach any firm conclusions.'" (See: MNI INTERVIEW: Tariff Inflation Impact Broadens- ATL Fed Study) 

Kashkari said a recession is not in his forecast. "I have every reason to believe that the cooling that we're seeing will probably continue and it will be somewhat gentle." Pointing to the FOMC's June SEP, he said "interest rates have some room to come down gently over the next couple of years. That's a reasonable guess."