Fed's Kashkari: Fed Must Focus on Inflation Risks, Too Early to Predict Next Move

May 27 — Minneapolis Federal Reserve President Neel Kashkari on Tuesday said the Fed must prioritize curbing surging inflation risks, but he’s not even close to predicting when the central bank will adjust interest rates. Kashkari also flagged that the “inflation shockwave” stemming from the Middle East conflict could linger, with those concerns now starting to show up in the bond market. When weighing the Middle East’s fallout on the U.S. economy, he noted inflation risks currently carry more weight than the chance of a weakening labor market — though he emphasized the Fed needs to watch both closely. Kashkari previously backed the Fed’s decision to hold rates steady in April, but was among officials who pushed back against the central bank’s dovish forward guidance. He argued the Fed should adopt “neutral guidance,” meaning future rate moves will hinge on upcoming economic data. “Since that dissent — several weeks ago now — I think most data points to inflation risks rising, not falling,” he said. When asked if he still favors neutral over hawkish language, he responded, “Right now, yes, I think so.” Even so, he added, “It’s nowhere near time for me to start predicting the timing of the next policy move.”