Fed’s Kashkari: “I have one rate hike penciled in for 2026”

Agustin Wazne FXStreet

Federal Reserve (Fed) Bank of Minneapolis President Neel Kashkari said during a panel discussion at the Aspen Ideas Festival 2026 in Aspen, Colorado, that he remains concerned about inflation in the service sector, while also noting some signs of improvement in the labor market.

Key takeaways:

I am concerned about inflation, especially in services.

I am seeing some signs of life in the labor market.

Inflation move-up is not just about Oil and the Middle East.

I see rates on hold in 2027.

It was an appropriate time to reset the FOMC statement.

I have one rate hike penciled in for 2026.

We’re going to have to see how no forward guidance works.

The Fed may need to raise rates amid broad inflation.

The goal is to lower inflation without employment damage.

I am not seeing the all-clear sign in the Middle East.”

Kashkari flags risk of broad inflation, keeps rate hike on the table for 2026

Kashkari delivered a distinctly hawkish-leaning message, with the FXS Speechtracker score at 7.3/10 notably above the 6.6/10 historical average. This underscores elevated concern about persistent inflation, especially in services. The emphasis that the latest inflation move-up is “not just about Oil and the Middle East,” combined with guidance for rates to stay on hold into 2027 and a penciled-in hike in 2026, signals a willingness to tighten again if broad price pressure fails to subside. However, signs of life in the labor market support the Fed's goal of cooling inflation without damaging employment. The decision to reset the Federal Open Market Committee (FOMC) statement and experiment with no forward guidance further highlights a cautious stance that keeps upside risks to the US Dollar in focus.

The FXS Fed Sentiment Index rose by 1.37 points to 122.42, reinforcing that the broader policy tone remains firmly in hawkish territory, well above the neutral 100 threshold. In combination with the stronger-than-baseline FXS Speechtracker score, this index move suggests that markets should continue to price a higher-for-longer Fed path, with potential support for the US Dollar against the Euro and Yen if incoming data validate Kashkari’s inflation concerns.

Author

Agustin Wazne

FXStreet

Agustin Wazne joined FXStreet as a Junior News Editor, focusing on Commodities and covering Majors.

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.