Kashkari, president of the Minneapolis Federal Reserve and a 2026 voting member of the FOMC, said on Wednesday that the U.S. central bank should begin raising interest rates gradually in order to bring down inflation and avoid the need for sharper hikes later. Speaking to CNBC, he pointed to strong corporate earnings and resilient consumer and labor markets, saying there is little evidence that monetary policy has become significantly restrictive. Kashkari was one of three voters who supported a quarter percentage point rate hike at last week's FOMC meeting. He said he is not advocating aggressive increases, preferring a 'step-by-step' approach to prevent inflation from becoming entrenched. He also said he is unsure what the FOMC will do at its September meeting and that incoming data will be critical. Kashkari added that Fed Chairman Warsh has not pressured him, telling him to 'do what you think is right for the economy.'
Kashkari, president of the Minneapolis Federal Reserve and a 2026 voting member of the FOMC, said Wednesday that the time has come for the U.S. central bank to begin raising interest rates gradually. He argued the approach would help lower inflation and reduce the risk of having to deliver much larger hikes later.
In an interview with CNBC, Kashkari said corporate earnings are strong and consumers and the labor market remain resilient. He said there is little evidence that monetary policy has become significantly restrictive, which makes it appropriate to start moving rates up now.
Kashkari was one of three FOMC voters who supported a quarter percentage point rate hike at last week's meeting. He stressed that he is not advocating big increases. Rather, he wants to act in small steps so inflation does not become entrenched and force policymakers into aggressive tightening later.
He added that he is uncertain what the FOMC will do at its September meeting, saying incoming data will be critical. He also said Fed Chairman Warsh has not pressured him, adding that Warsh told him: "Do what you think is right for the economy."
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