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Oct. 6, 2022, 11:46 a.m. EDT

Kashkari says inflation still too high for Fed to mull pause in interest-rate hikes

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By Jeffry Bartash

Minneapolis Federal Reserve chief Neel Kashkari on Thursday said it’s too early for the central bank to think about a pause in interest-rate hikes because there’s little sign that inflation has peaked.

Kashkari said the Fed needs to keep raising rates until the bank sees clear evidence that inflation is falling and falling fast.

“We are seeing almost no evidence that underlying inflation is coming down,” he said at a banking conference in Minnesota.

Another regional Fed bank president, Raphael Bostic of Atlanta , said he would like the central bank to pause a series of rate hikes after the end of 2022 to see how they affect the economy. He is the only senior Fed official to suggest a pause, however.

Kashkari, for his part, said “I am not comfortable saying we are going to pause” until inflation clearly begins to decline.

The yearly increase in the cost of living has jumped to as high as 9.1% this year from less than 2% before the pandemic, putting it at the highest level since the early 1980s.

The Fed wants to restore inflation to 2% or so, and it’s sharply raising interest rates to push prices down. Higher rates slow the economy, raise unemployment and reduce demand.

Some Fed critics argue the central bank might overdo interest rate hikes and trigger a recession. Many economists predict a recession is likely by next year.

Kashkari said he wasn’t sure a recession could be avoided.

“My answer is I hope so. We are going to try. But we have to bring inflation down,” he said.

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