Fed’s Kashkari says inflation is still too high across US economy

WASHINGTON: Minneapolis Federal Reserve President Neel Kashkari said on Sunday that inflation is too high across all sectors of the US economy, not just in rising oil prices.

“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’ “Sunday Morning Futures.”

Kashkari supported the unanimous vote last week to raise interest rates by a quarter percentage point to 3.75%-4.00%. He was one of three officials to dissent at the Fed’s prior meeting in favor of a hike when the majority of the Federal Open Market Committee then opted to leave rates unchanged.

Crude oil prices soared after hostilities intensified with the US and Iran attacking and sinking some oil tankers in the Strait of Hormuz and Saudi Arabia closing its vital East-West pipeline due to aerial attacks in the widening Middle East war.

The Fed’s job is to get inflation back down to our 2% target, he said, and there is nothing it can do with interest rates that will open up the Strait of Hormuz or bring oil prices down.

“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.”

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, though that figure will not be released officially until later this month.

“Too many categories are still posting increases above 3 percent, on both a 6- and 12-month basis,” Warsh said at his press conference following the meeting.