Neel Kashkari, President of the Federal Reserve Bank of Minneapolis and a voting member of the Federal Open Market Committee (FOMC) in 2026 through the rotating regional president seat, backed last week's unanimous 25-basis-point hike to a range of 3.75% to 4% and warned that waiting too long to raise rates risks letting inflation become entrenched.
In a Fox News interview on Sunday, he stressed that the Fed's job is to bring inflation back to its 2% target and said delaying action could force more aggressive hikes later. Policymakers' projections point to at least one more increase before the end of the year.
Inflation, Kashkari said, remains too high, and it reaches well beyond the pump: what Americans feel every day runs "in all aspects of the economy," and prices stay elevated even after stripping out volatile food and energy. He also spelled out what the Fed cannot do about oil: it lacks the tools to reopen the Strait of Hormuz and cannot directly lower oil prices.
Yet the economy has held up. Kashkari called it very resilient despite geopolitical conflicts and trade issues, described growth as fairly robust, and said productivity is showing some signs of improvement, while the labor market remains strong.
He hopes that as the conflicts fade into the background, growth can take over and bring inflation down, making the Fed's job much easier, and he hopes for support from other parts of government and the real economy.
On bond markets, he said the Treasury holds responsibility for them and noted that strong investment demand tends to push interest rates higher.
Key Quotes:
Monetary Policy
It is the Fed's job to bring inflation back to its 2% target.
The Federal Reserve has the tools to cool inflation.
Waiting too long to raise rates risks inflation becoming entrenched.
Delaying action could require more aggressive rate hikes later.
Supported the Fed's unanimous decision last week to raise the benchmark interest rate by 25 basis points to a range of 3.75% to 4%.
Inflation
Inflation remains too high.
The inflation that the American people are feeling every day is much beyond just oil prices — it's in all aspects of the economy.
Inflation remains high even when excluding volatile food and energy sectors.
There is evidence that inflation is showing up in the services sector as well.
Energy & External Risks
The Federal Reserve does not have the tools to reopen the Strait of Hormuz.
The Federal Reserve cannot directly lower oil prices.
Growth & Economy
The US economy has been very resilient despite geopolitical conflicts and trade issues.
Growth has been fairly robust.
Productivity is showing some signs of improvement.
Labor Market
The labor market remains strong.
Outlook
I hope that as some of those conflicts go to the background, 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.
Hopefully we'll get support from other parts of government, the real economy.
Financial Conditions
The bond market is the responsibility of the Treasury.
Strong investment demand tends to boost interest rates.