Odd Lots Neel Kashkari on the Fed's Commitment to Defeating Inflation
6 snips
Aug 31, 2022 Neel Kashkari, President of the Minneapolis Federal Reserve and a notable voice in monetary policy, discusses the Fed's aggressive stance against inflation. He highlights the complexities of recent inflation dynamics and the necessity of strong public trust in the Fed’s measures. Kashkari also dives into the implications of interest rate hikes, the strength of the labor market, and how U.S. economic policy influences global markets. His insights reveal the delicate balancing act the Fed must perform to navigate today’s challenges.
AI Snips
Chapters
Transcript
Episode notes
Inflation's Root Causes
- The current inflation surge isn't primarily labor-driven, but stems from supply chain issues, the war in Ukraine, and stimulus.
- The labor market's role in controlling inflation depends on improvements in these other areas.
Kashkari's Shift to Hawkish Stance
- Neel Kashkari changed his inflation stance due to unexpected data trends and the risk of unanchored inflation expectations.
- Despite fiscal stimulus waning, consumer balance sheets and worker return have not improved as quickly as anticipated.
Inflation Expectations and Fed Credibility
- Current inflation expectations seem anchored due to the Fed's commitment to controlling inflation.
- Kashkari emphasizes the importance of the Fed following through on its commitment to maintain this confidence.