Kashkari: US Inflation Still Too High Despite Softer PCE Data

Minneapolis Federal Reserve Bank President Neel Kashkari said on Wednesday that US inflation is still running too high, shortly after new data showed annual price growth remained above the central bank's 2 percent goal in August.

Speaking with CNBC's Steve Liesman at a Council of Foreign Relations event in New York City, Kashkari said, "Inflation is still too high."

He added that price pressures have now been elevated for over five years and that the latest figures had not shifted his view. "It's been elevated now for more than five years. I didn't think the inflation data today really changed that story for me very much," the Minneapolis Fed president said.

The Bureau of Economic Analysis reported that the personal consumption expenditures (PCE) price index rose 3.4 percent on an annual basis in August. Core prices, which exclude volatile food and energy costs, increased 3 percent year-over-year.

Inflation has stayed above 2 percent since March 2021, according to the consumer price index, a separate gauge of prices. That measure peaked at 9.1 percent in June 2022, a four-decade high.

Last month, Kashkari and all 11 of his colleagues on the Federal Open Market Committee voted to lift interest rates by a quarter point. The committee is scheduled to meet again on October 27-28, just days before the midterm elections.

Since the FOMC raised borrowing costs to a range of 3.75 percent to 4 percent, several panel officials have signaled that further rate increases may lie ahead.

"In my base case, further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion," Fed Governor Michael Barr said Tuesday at the Detroit Economic Club.

"Looking ahead, if conditions evolve as I expect, some modest further tightening may be warranted," said Anna Paulson, president of the Federal Reserve Bank of Philadelphia, last week at a financial technology conference. She added, "As always, I'll be watching the data and listening closely to what businesses and workers are telling me."

Kashkari argued Wednesday that one takeaway from the data is the US economy's "resilient" performance despite shocks from the Iran war and President Trump's tariffs on imports.

The BEA reported Wednesday that gross domestic product grew at an annual rate of 2.2 percent in the second quarter of this year, an upward revision from an earlier estimate of 1.5 percent.

"The last several years, in the face of tariffs and trade war, in the face of the geopolitical conflict in the Middle East, it's remarkable how resilient the U.S. economy has been," Kashkari told Liesman.

Kashkari: US Inflation Still Too High Despite Softer PCE Data

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