Fed's Kashkari says inflation fight takes priority as labour market is 'in decent shape'
Minneapolis Fed President Neel Kashkari said the central bank's priority remains price stability, warning that persistent inflation could become embedded in consumer expectations. He described the US labour market as 'in decent shape' and pushed back against expectations of near-term rate cuts. The comments come ahead of the April PCE inflation report.
Kashkari said in a Minneapolis speech that the disinflation trend of the past year had stalled this year alongside an energy shock driven by the Middle East. He called the stickiness of core inflation near 2.8 percent annual 'unacceptable' and warned that allowing that level to embed in household expectations would force tighter policy later. The tone clashed with recent market pricing of imminent easing.
While describing the US labour market as 'in decent shape', Kashkari noted the recent moderate rise in jobless claims could be a 'healthy rebalancing' rather than a recession signal. He does not hold a voting seat on the FOMC this year, but is a prominent voice for the hawkish wing; his remarks landed just before the April PCE inflation print.
According to CME FedWatch, the probability of at least a 25 basis-point cut in September fell from 64 percent to 52 percent during the latest session. The 10-year Treasury yield rose to 4.46 percent. Analysts noted that a PCE reading above an annual 2.3 percent would reinforce Kashkari's framing. This article is not investment advice.
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