February 07, 2023 12:01 GMT
Kashkari Still Favors Getting Rates to 5.4%
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- Speaking to CNBC in his first commentary since last week’s FOMC and payrolls, Kashkari (’23 voter) says he still favors getting rates to 5.4%.
- He was surprised by the strength of the jobs report with underlying strength in services but nobody should overreact to one report (reported by Reuters).
- 12 month PCE inflation is the ultimate goal and “virtually no progress” seen in core services ex housing”.
- With Fed models failing during Covid re-opening, he reiterates that we must let realized inflation guide policy rather models, consistent with various FOMC members looking for an accumulation of evidence that inflation is moderating.
- It supports the earlier drift higher for the FOMC-dated OIS implied terminal to 5.12% with the July meeting but remains off yesterday’s high of 5.16%.