Fed’s Kashkari: Can’t allow inflation expectations to get unanchored
Source Fxstreet
Minneapolis Fed President Neel Kashkari warned that US tariffs act as a drag on economic growth and emphasised the central bank’s responsibility to prevent those trade measures from fuelling longer-term inflation.
Key Quotes
- Independent monetary policy leads to better economic outcomes, is foundational.
- Notes that his own change from dove to hawk to current moderate came from analysis of data.
- Fed policymakers are making best call they can, based on data. That's what independence means.
- Tariffs are somewhat inflationary.
- Tariffs also slow growth.
- Fed's one tool is in tension.
- Too soon to judge path of interest rates.
- Logical that tariff leads to one-time increase in prices, but backdrop of high inflation runs risk of unanchoring inflation expectations.
- Can't allow inflation expectations to get unanchored.
- So far long-run inflation expectations have not moved much. Fed's job to make sure they don't.
- Fed's job is to make sure tariffs don't lead to longer-term inflation.
- To no longer have a trade deficit, investors would have to conclude US is no longer best place to invest.
- Still early to tell if that's happening.
- Bond yield up and dollar down indicates some reassessment of where global investors want to invest.
- All of this can change quickly, with resolution of trade uncertainty.
- Haven't seen this level of anxiety since COVID hit.
- Interest rate level in US is largely influenced by capital flows.
Disclaimer: For information purposes only. Past performance is not indicative of future results.
Recommended Articles
October hike odds climb toward 60% as Goldman and BofA both flip — what Warsh's "dose of accommodation" really changedRate futures now price roughly 55% to 62% for a 25bp hike at the October 27-28 FOMC, up from about 30% before Chair Warsh's post-meeting framing that the Fed is merely "removing some accommodation." Goldman Sachs has added an October hike to its forecast and Bank of America now sees moves in both October and December. Here is the repricing, the language behind it, and the two data points that decide it.
Rate futures now price roughly 55% to 62% for a 25bp hike at the October 27-28 FOMC, up from about 30% before Chair Warsh's post-meeting framing that the Fed is merely "removing some accommodation." Goldman Sachs has added an October hike to its forecast and Bank of America now sees moves in both October and December. Here is the repricing, the language behind it, and the two data points that decide it.
West Texas Intermediate (WTI) oil price declines after posting nearly 2.5% gains in the previous day, trading around $90.30 per barrel during Asian hours on Friday.
Hurricane Isaias has shut in a quarter of Gulf oil output — can WTI clear $92 before Thursday's EIA report?WTI trades at $90.80 after rebounding roughly 3% from Wednesday's $87.96 low as Hurricane Isaias — the Atlantic season's first — forces producers to shut in about 25% of US Gulf of Mexico output. Brent holds at $103.41. The first official read on the disruption arrives with the EIA weekly petroleum report on Thursday 15 October — here are the key levels and both scenarios.
WTI trades at $90.80 after rebounding roughly 3% from Wednesday's $87.96 low as Hurricane Isaias — the Atlantic season's first — forces producers to shut in about 25% of US Gulf of Mexico output. Brent holds at $103.41. The first official read on the disruption arrives with the EIA weekly petroleum report on Thursday 15 October — here are the key levels and both scenarios.
US September CPI lands Wednesday with headline inflation seen at 3.7% y/y and core at 0.2% m/m. December hike odds sit near 70% — here are the scenarios, the calendar and the key levels.
Spot gold closed at $4,194.645, up 1.47% — its first weekly gain in three weeks — and COMEX futures settled back above $4,200 at $4,220.30. Here are the drivers, the levels and the scenarios into Wednesday's CPI.
