Fed's Kashkari: Not seeing evidence yet that long-run inflation expectations are rising

In an interview with CNBC on Friday, Federal Reserve (Fed) Bank of Minneapolis President Neel Kashkari said that their job is to make sure that inflation expectations don't rise, per Reuters.

Key takeaways

"Not seeing evidence yet that long-run inflation expectations are rising."

"Investors may believe that if trade deficit is going to come down, US may not be as attractive an investment."

"There may be credibility to the story of investor preferences shifting."

"I think we're quite a ways away from market conditions we saw in pandemic."

"Ultimately we have the ability to manage some of these transitions, can smooth out dislocations."

"We cannot determine where yields ultimately settle, only can smooth the transition."

"There was a lot of good news under the hood in CPI."

"The effect of tariffs suggest inflation will be going back up again, our job to ensure it doesn't turn to long-term inflation."

"If we hadn't had 4 years of high inflation, I'd be more comfortable taking a look-through approach."

"With inflation still elevated, it makes me nervous about taking that one-time look-through approach on tariffs' effect on inflation."

"Right now not seeing a systemic risk in private credit."

"It bears watching but not seeing fundamental kindling there."

"Tariffs put Fed in tough position in pushing up inflation and slowing growth."

"Outlook depends a lot on how the tariff negotiations go, how quickly they proceed."

"If they drag on it may take more time to reach the needed level of comfort around inflation to lower rates."

"I think the Fed or treasury stepping in should only be done reluctantly."

"I think we should be cautious about taking moves that indicate a weakening of the Fed's commitment to bring inflation down."

Market reaction

The US Dollar struggles to rebound following these comments. At the time of press, the USD Index was down 1.1% on the day at 99.77.