© Reuters. FILE PHOTO: Minneapolis Federal Reserve Bank President Neel Kashkari poses during an interview with Reuters in his office at the bank’s headquarters in Minneapolis, Minnesota, U.S., January 10, 2020. REUTERS/ Ann Saphir/File Photo
By Ann Saphir
(Reuters) – Minneapolis Federal Reserve Bank President Neel Kashkari on Thursday said the U.S. central bank has “more work to do” on bringing down inflation, and is “quite a ways away” from being able to pause its aggressive interest-rate hikes.
“I’m not comfortable saying we are going to pause” until there is evidence that underlying inflation is cooling, Kashkari said at the Bremer Financial Corporation Fall Leadership Conference. There is “almost no evidence” that inflation has peaked, he said.
The Fed has delivered a string of supersized three-quarters-of-a-percentage point interest rate increases to bring down decades-high inflation, and is expected to do so again when it meets early next month. Fed policymakers now anticipate short-term borrowing costs, currently at 3%-3.25%, will rise to 4.6% by early next year.
That steeper-than-expected U.S. rate-hike trajectory has sparked declines in most major currencies against the dollar and added to turmoil in global equity markets already roiled by Russia’s invasion of Ukraine and other risks.
Most other world central banks are also raising interest rates to fight inflation made worse in many cases by the stronger dollar, and some have intervened in their own financial markets to address disclocation amid that policy tightening.
U.S. stocks have also been volatile, with benchmark equity indexes on Thursday dropping further, and Kashkari said he believes there could be some “cracks” in financial markets as investors adjust to the higher rate environment.
But, he said, the bar for the Fed to shift its policy stance to rescue markets here “is very high.”