Fed Faces More Challenges in Controlling Inflation, Reports Reuters

By Michael S. Derby

Federal Reserve Bank of Minneapolis President Neel Kashkari stated on Monday that the U.S. central bank likely has additional work to do to manage inflation effectively.

“The economy has proven to be quite resilient, even in light of the significant interest rate increases over the past couple of years. That’s encouraging,” Kashkari remarked during an interview.

However, he emphasized, “We haven’t fully addressed the inflation issue. There is still more to be done.”

Kashkari’s remarks imply a tendency toward further interest rate hikes. The Fed recently concluded a meeting where it decided to keep its overnight short-term interest rate target steady at between 5.25% and 5.5%, while maintaining the possibility of future increases, given that inflation remains significantly above the 2% target.

Despite some easing in price pressures, many in the financial markets speculate that the Fed may have completed its cycle of rate hikes.

While Kashkari noted that recent inflation data has shown improvement, he expressed caution, saying, “I’m somewhat hesitant to declare victory prematurely,” and indicated that he would like to see more data before determining the Fed’s next steps.