MNI BRIEF: Fed Must Keep Hiking After New CPI Report-Kashkari

The Federal Reserve needs to keep pressing ahead with rate hikes after a report Wednesday showing inflation was slower than investors expected because price gains are likely to remain above 2% for a long time, Minneapolis President Neel Kashkari said.

“I was certainly happier to see inflation surprise to the downside” after a series of upside surprises, Kashkari said during a talk at the Aspen Economic Strategy Group. “It doesn’t change my path” laid out in June calling for a policy rate of 3.9% at the end of this year and 4.4% at the end of next year, he said. That remains true even with a recession being possible in the near term, he said.

The Fed is "a long way" from seeing victory on inflation so the idea of a rate cut next year isn't realistic, he said. “We will sit there until we become convinced that inflation is well on its way back to 2%.” The comments echo St. Louis President Jim Bullard who told MNI Tuesday that rates could be higher for longer than investors expect. (See: MNI INTERVIEW:Fed's Bullard-Rates Could Be 'Higher For Longer')