By Greg Robb
Federal Reserve officials in rare agreement on the goal of bringing inflation down to the 2% target, said Minneapolis Fed President Neel Kashkari said Tuesday.
“The only other time I have seen us this united was the beginning of the pandemic, when we knew we had to act boldly to support the economy through the pandemic and through the downturn,” Kashkari said, during a question-and-answer session streamed by the Wall Street Journal.
“We are all united in our job to get inflation back down to 2%. And we are committed to doing what we need to do in order to make that happen,” he added.
Over the last few months, Kashkari has become a leading hawk after spending most of his six years on the central bank as a dove.
The Minneapolis Fed president said the Fed will work hard to achieve a “soft landing” and avoid a recession, but said that some of the supply-side factors that are out of the Fed’s control.
Without help from the supply-side there is likely to be a hard landing, he added.
Kashkari said he thought the Fed had to continue to raise its benchmark interest rate until there was compelling evidence that core inflation had peaked and was coming down.
At this point, he said the Fed should pause and wait for inflation to move down before easing the stance of policy.
The government reported that the consumer price index increased at an 8.3% rate in August, a level of inflation not seen since the 1980s. Core prices rose 0.6%, a larger increase than 0.3% gain in July.
With little sign inflation is coming down, the Fed has remained aggressive.
Last week, the Fed increased its fed funds rate by 0.75 percentage points to a range of 3%-3.25%. That’s the third supersized rate increase in a row.
Officials also surprised the markets by penciled in further rate hikes in the near term — to a range of 4.25%-4.5% by the end of the year and a 4.5%-4.75% range in 2023.
The yield on the 10-year Treasury note /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y 0.00% rose close to 4%.