Biggest fear is inflation will be more persistent: Federal Reserve’s Kashkari

MINNEAPOLIS Federal Reserve Bank President Neel Kashkari said on Tuesday his biggest fear is that the Fed and financial markets are underestimating underlying inflation pressures, and beating inflation will require even more aggressive rate hikes than he currently expects.

Kashkari is already the most hawkish of all the central bank’s 19 policymakers, and expects the Fed to need to lift its policy rate, now at 2.25 to 2.5 per cent, another two full percentage points by the end of next year.

He would want to see “compelling” evidence that inflation is falling towards the Fed’s 2 per cent target before easing up on rate hikes, he said. REUTERS