Fed rate hike odds hit 46% as Kashkari warns on inflation
Minneapolis Fed President Neel Kashkari backed gradual interest rate increases as persistent inflation and uncertainty around the Strait of Hormuz complicate the outlook for US monetary policy. Kashkari calls for gradual Fed rate hikes Kashkari said during a CNBC interview on Wednesday that the central bank should begin moving interest rates higher as inflation remains above its target. “I think now is the time to start slowly moving rates up,” Kashkari said. The Minneapolis Fed president argued that current monetary policy does not appear particularly restrictive. He pointed to strong corporate earnings and continued economic resilience as signs that higher borrowing costs have not placed substantial pressure on demand. Kashkari clarified that he was not advocating a series of aggressive increases. Instead, he supported incremental moves intended to reduce inflation without causing an unnecessary slowdown in the US economy. His remarks add to a growing debate inside the Fed over whether rates are high enough to contain renewed price pressures. Kansas City Fed President Jeff Schmid also called for tighter monetary policy on Wednesday, although he did not specify when or by how much rates should rise. Feds July decision exposed a widening policy split The Federal Open Market Committee maintained the federal funds rate at 3.50%–3.75% during