Kashkari Cites Broad Services Inflation Despite Energy Exclusion
Fed official Neel Kashkari states inflation is widespread across services, not just energy, supporting further rate hikes.
Key points
- Neel Kashkari states U.S. inflation is broad-based and not limited to energy sectors.
- The Federal Reserve raised rates by 25 basis points to a range of 3.75% to 4.00%.
- Policymakers expect at least one more rate hike before the end of the year.
Inflation in the United States remains broad-based across multiple economic sectors, according to Neel Kashkari. The Minneapolis Fed president stated that price increases extend well beyond volatile energy and food costs.
Kashkari emphasized that core inflation remains elevated even when excluding these volatile categories. He noted that services prices are rising significantly, indicating a persistent pressure on the wider economy.
Services drive persistent price pressure
The central bank’s focus remains on returning inflation to its two percent target. Kashkari argued that the current situation is not solely driven by rising oil prices. Instead, everyday costs for Americans are increasing across a broad range of services.
Rate hike decision reflects policy stance
The Federal Reserve unanimously raised the benchmark interest rate by 25 basis points last week. This move brought the rate range to 3.75 percent and 4.00 percent. Kashkari supported this decision as a necessary step to anchor expectations.
Policymakers currently project the possibility of at least one additional rate increase before year-end. This outlook reflects the central bank’s commitment to fighting inflation. The source, sana.sy, reported these remarks from Washington on September 20.
Fed limits on oil price control
Kashkari clarified that the Federal Reserve lacks tools to directly lower oil prices. The bank cannot reopen the Strait of Hormuz or manage supply chains. Consequently, the Fed must rely on monetary policy to counter broader inflationary trends.
