MNI BRIEF: Kashkari Says Aggressive Hikes May Bring Recession

Minneapolis Federal Reserve President Neel Kashkari on Wednesday warned against tightening monetary policy too fast to bring down an inflation rate that will naturally slow this year as the economy rebalances following the pandemic downturn.

Inflation will ease in 2022 while remaining above the Fed's 2% target, he said during an online talk, though it will take time for the squeeze on labor force participation and supply chains to unwind.

“If we raise rates really aggressively, we run the risk of slamming the brakes on the economy, putting the economy in recession,” Kashkari said. Fed action to tackle persistent and higher-than-expected inflation can tackle the demand side of the economy but will do little on problems like clogged ports, he said, adding the Fed would do its bit to slow price gains.