Minneapolis Federal Reserve Bank President Neel Kashkari stated it is too early to conclude that interest rates need to be increased, though he believes the Fed should keep all policy options open.
Speaking at an event at Korea University in Seoul on Friday, Kashkari said, "I think it is premature at this point to conclude that we need to immediately raise rates. We need to continue observing economic data and monitor developments following the Middle East conflict before I consider whether policy adjustments are necessary."
Fed officials held interest rates steady at their April meeting. While Kashkari supported that decision, he was among three policymakers who dissented on the wording of the post-meeting statement, which suggested the Fed's next move would likely be a rate cut. Kashkari and his two colleagues advocated for more neutral language to signal that both rate hikes and cuts remain possible.
Like many Fed officials, Kashkari noted that the Iran war has increased uncertainty regarding the U.S. economic outlook. He also remains vigilant on inflation, which has risen in recent months since the conflict erupted and pushed up energy prices. This could prolong the high cost-of-living pressures U.S. residents have faced for the past five years.
The Minneapolis Fed official reiterated this stance on Friday, pointing out that under both the most optimistic and pessimistic scenarios, inflation could remain significantly elevated for an extended period. He stated he is closely monitoring this risk, as well as the possibility that inflation expectations could become unanchored.
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