The Minneapolis Fed president Neel Kashkari has been speaking. Kashkari is not a voting member on the FOMC in 2022. He will be a voting member in 2023. He is thought of as one of the more dovish members although he is in favor ofa tighter policy.
Some of his comments today:
- Covid shows that it will be a while before we can comfortably live with Covid, before supply chains come back, before workers on the sidelines come back to work
- Fed can soften demand by raising rates, tightening financial conditions, but that won't address supply-side issues
- He remains optimistic, but will take a wild longer than I had hoped, to get people back too work
- Most forecasters see inflation falling to 3% by the end of this year
- My guess is by the end of this year won't be bacck to Fed's 2% target, but well on our way ttowards that
- Fed will watch the data over next six months to make sure inflation is going in that direction
- Fed is taking very seriously the risk that thigh inflation could get embedded
- Sees more risk of ending up in a low-inflation environment in a few years
- It is appropriate to normalize policy, take a foot off the gas, to deal with risk of high inflation getting embedded
- Warning to colleagues is "let's not overdo it"
