MNI BRIEF: Kashkari-Fed Must Stay Focused On Inflation Fight
Minneapolis Federal Reserve President Neel Kashkari said Thursday monetary policy must remain focused on rebalancing an economy facing rapid inflation and the banking system remains "sound" after the collapse of Silicon Valley Bank.
Services inflation remains "concerning" even as interest-rate increases have slowed gains in housing and goods, Kashkari said during a town hall discussion. “We know we have to get inflation down, and we will,” he said. He also rejected the idea of increasing the Fed's price target with inflation so high, saying it would do "irreparable" damage to the central bank's reputation. (See: MNI INTERVIEW: Central Banks Underestimate Sticky Expectations)
Banking strains may take longer than some expect to unwind, and it's unclear if there will be a “sustained credit crunch which would then slow down the U.S. economy,” he said.