MNI BRIEF: US Economy May Face Hard Landing, Kashkari Says
Minneapolis Fed President says the FOMC is determined to bring inflation under control.
The U.S. economy may face a hard landing as the Federal Reserve acts to bring inflation back under control, Minneapolis Fed President Neel Kashkari said Thursday.
"We know we have to get inflation down, we’re going to do everything we can to achieve a quote-unquote soft landing, but I’ll be honest with you, I don’t know the odds of us pulling that off," he said during an online talk. "Some of it is out of our control. It’s related to what happens on the supply side of the economy."
Forward guidance about rate hikes mean the Fed has done more than its actual increases this year to curb inflation, Kashkari said, and “we have to follow through on all of the forward guidance” on rates and reducing the balance sheet. Former Fed economists tell MNI policymakers are determined to head off a wage-price spiral with aggressive monetary tightening, even at the cost of larger-than-desired losses to growth and jobs. (See MNI: Fed Seen Taking Bumpy Road to Avoid Wage-Price Spiral)