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Kashkari: "We Just Don't Know" If 3 Hikes Enough In 2022


Minn Fed Pres Kashkari kicks off Fed commentary in the post-January meeting period with an interview on NPR radio: The highlight here is that he thinks "we just don't know" whether 3 rate hikes will be enough in 2022, and doesn't dismiss the idea of 5 being required. He's one of the biggest doves on the FOMC and his last SEP submission was for 2 hikes (and as of early Jan, he anticipated liftoff in July).

  • Calls the economy "a little bit imbalanced right now", says it's the Fed's job to restore balance.
  • How many rate hikes are needed? "That's a good question." Says some prices pressures will "naturally" relieve themselves and that means the Fed will have to do less.
  • Says right now the FOMC has signalled that most participants think there will probably be 3 increases this year, 25bp each, "but we have to see how the data comes out".
  • Markets have started pricing in 5 hikes, is 3 enough? "Again, we just don't know" - "we have to wait and see" on whether some workers return to the labor market.
  • "High inflation has been higher than I expected and has lasted longer".
  • "I don't agree" that it took central bankers too long to address inflation.

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