Fed’s Kashkari says inflation is ‘still too high’ even after softer-than-expected PCE data

Minneapolis Federal Reserve President Neel Kashkari said inflation is still too high, even after August PCE inflation came in softer than economists expected. In comments to CNBC at a Council on Foreign Relations event in New York, he argued that while there are multiple measures of inflation, the overall rate of price growth is “around a 3% rate” and has remained elevated for more than five years. He said the latest data did not meaningfully alter the inflation picture for him.

Kashkari’s remarks came after the release of the Fed’s preferred inflation gauge, August personal consumption expenditures, including a core measure that was reported as lower than forecast at 3% year on year. He characterised that cooling as insufficient to change his concern about the durability of inflation.

He also pointed to other data released the same day as evidence that the economy remains resilient, citing consumer spending and GDP. Finally, CNBC noted that the Fed recently delivered its first interest rate hike in three years and signalled that another increase could be on the horizon.

For FX traders, the key watch is whether Kashkari’s “inflation still too high” stance becomes a broader theme among Fed policymakers, since that can feed into expectations for the timing and extent of future rate moves.