Minneapolis Federal Reserve Bank President Neel Kashkari said on Tuesday his biggest fear is that the U.S. Central bank misreads the extent and persistence of price pressures and will need to deliver even more aggressive rate hikes to control inflation.

Kashkari is already the most hawkish of all the central bank’s 19 policymakers and expects the Fed to need to lift its policy rate, now at 2.25%-2.5%, another two full percentage points by the end of next year.

“By many, many measures we are at maximum employment and we are at very high inflation. So this is a completely unbalanced situation, which means to me it’s very clear: We need to tighten monetary policy to bring things into balance,” he said Tuesday at a gathering of the Wharton Club of Minnesota in Minneapolis. 

Kashkari is already the most hawkish of all the central bank’s 19 policymakers, and expects the Fed to need to lift its policy rate, now at 2.25 to 2.5 per cent, another two full percentage points by the end of next year.

He would want to see “compelling” evidence that inflation is falling towards the Fed’s 2 per cent target before easing up on rate hikes, he said. REUTERS

Right now, he said, it’s “very clear” the Fed needs to tighten monetary policy.

If inflation were at 4 per cent, he said, the Fed could afford to go slow on rate hikes to make sure it doesn’t overdo it and send the economy into a downturn.

But with inflation as high as it is, he said the Fed needed “to err on making sure we are getting inflation and only relax when we see compelling evidence that inflation is well on its way back down to 2 per cent.”

Kashkari says his biggest concern is that if the Fed is “misreading the underlying inflation dynamics, then it’s going to take us a while probably to figure that out, and then we are going to have to be even more hawkish than I am envisioning right now.”

But with inflation as high as it is, he said the Fed needed “to err on making sure we are getting inflation and only relax when we see compelling evidence that inflation is well on its way back down to 2%.”

Kashkari says his biggest concern is that if the Fed is “misreading the underlying inflation dynamics, then it’s going to take us a while probably to figure that out, and then we are going to have to be even more hawkish than I am envisioning right now.” 

We have always emphasized the importance of having a good website for your company because it can act as your best tool for marketing and sales. A poorly designed website can repulse people from your business and can cause you to lose customers before you even have them. Get in touch with HyperEffects to work on creating, enhancing, and making the website of your company more user-friendly.