- The Fed should have a neutral policy outlook going forward
- The risks to US inflation are now higher than the risks of a deteriorating labor market
- However, we still have to pay attention to both risks
- Most US data since April has shown that inflationary risks are higher, not lower
- The inflationary shock wave sent around the world by the Middle East war may continue
- Concern about global inflation is making its way into the bond market
- It is too early to make such a prediction about when the next move will be (when asking about October prospects)
- I want to see what happens in the negotiations between the US and Iran and see how global supply chains respond
- I’m confident that Fed policymakers will vote based on their own reading of the economy and what is appropriate
- “It will be the best ideas that ultimately convince the committee.”
As a reminder, Kashkari defected during the last FOMC meeting in April, objecting to the central bank’s dovish policy statement. While he voted to keep interest rates unchanged, he was not happy with the language in the statement because he felt it was still leaning more toward cutting interest rates rather than being neutral or acknowledging the upside risks to the inflation outlook.
His comments above at least show how he feels about this issue.
However, he is not pushing hard for a tougher stance. He remains tight-lipped about what he feels the Fed should do next and when. But as it stands, he would like to have that choice in wanting the Fed to be more neutral in its statement.
