Fed kashkari boxing meme
  • Appropriate to continue interest rate hikes at least at the next few meetings until confident inflation has peaked
  • increasing evidence that inflation may have peaked
  • Fed should then hold target interest rate and says his forecast is that would be at 5.4%
  • won't know if that is high enough until fed pauses for a reasonable period of time
  • once Fed allows for policy lag effects, can then assess if rates need to go higher or remain at peak for longer
  • in this phase any sign of slow progress on lowering inflation will require taking policy rate potentially much higher
  • Fed can consider cutting rates only once convinced inflation well on its way back down to 2% target
  • Fed must avoid cutting rates prematurely and having inflation flare up again as that would be a costly error

A year ago, Kashkari was one of the more dovish of the Fed officials arguing consistently that inflation was a transitory. Now he targets the terminal rate above what the Fed had set at their December meeting of a 5.1%, and has shifted his chatter toward the more hawkish side.

US stock futures are dipping a bit.

The NASDAQ is up around 65 points now. The Dow Industrial Average is up around 100 points. The two year yield is down around seven basis points and the 10 year is still down -11 basis points.

Kashkari is one of the first Fed officials to speak following the Christmas/new year holiday. I noticed that Feds George will be on CNBC tomorrow at 8:30 AM.

Later today, the Fed will release the minutes of their December meeting where they raise rates by 50 basis points to 4.25% to 4.5% slowing the pace of the tightenings in the process.