Fed’s Kashkari says officials are ‘a long way’ from backing off inflation fight.

Federal Reserve Bank of Minneapolis Governor Neel Kashkari said Friday that the market is ahead, hoping that the central bank, which has been raising interest rates rapidly this year, will soon begin to recede.

“I’m amazed at the interpretation of the market,” Kashkari said in an interview. “The Commission is united in its determination to bring inflation back to 2%, and I think we will continue to do what we need to do until we are confident that inflation is moving back to 2%. Is far from it. “

This week, the Federal Reserve raised interest rates by three-quarters percentage points, raised supersize interest rates for the second time in a row, and raised policy settings to the range of 2.25 to 2.5 percent. It is broadly what policymakers consider to be a neutral setting that neither stimulates nor slows growth, and further rises in interest rates will begin to aggressively brake the economy.

In light of that fact, Federal Reserve Chairman Jerome H. Powell said policymakers would set interest rates on a per-meeting basis rather than committing to broader planning in advance. Investors saw it as a sign that central banks could sharply slow interest rate movements in the coming months as the economy slows. In fact, bond market pricing suggests that investors believe authorities may start lowering interest rates next year as well.

“I don’t know what the bond market is looking at to reach that conclusion,” Kashkari said, adding that it was “very, very expensive” to lower interest rates.

Kashkari said it was too early to know how much a rate hike would be appropriate in September, but it was “reasonable” for him to raise the rate hike by 0.5 points at an upcoming Fed meeting.

But he said inflation data is “badly” amazing, and a continued rise in core inflation could make him think that a three-quarter point move is needed. rice field. (Core inflation removes volatile fuel and food prices to get signs of underlying inflationary pressure.)

According to Kashkari, the difficult question to answer is how high interest rates need to be raised to combat inflation.

“How much do we have to do to break the inflation cycle and restore inflation?” Kashkari said. “No one knows it.”

But he added, “We know we have work to do and we promise to do it.”