MNI BRIEF:Kashkari Puts 40% Odds On Larger Tightening Scenario

Minneapolis Fed President Neel Kashkari said Tuesday he's putting 40% odds on a scenario where the central bank keeps raising interest rates and perhaps substantially to curb inflation while the odds of a soft landing have reached 60%.

The soft landing scenario would come with perhaps one more rate increase this year and holding policy in place for a while, Kashkari said in an essay published on the regional bank's website.

The other scenario is a "high-pressure equilibrium" with a soft landing but inflation stuck around 3% and more robust consumer spending, he said. "In this scenario, the FOMC would then have to raise rates further, potentially going significantly higher to push inflation back down to our target." Policymakers can show patience in figuring out where the economy is going, he said. (See: MNI INTERVIEW: Fed Right To Pause; Fiscal Boost Offsets Rates)