Fed's Kashkari warns that tariffs are pushing up goods prices
Federal Reserve (Fed) Bank of Minneapolis President Neel Kashkari flashed another policy warning sign on Wednesday, cautioning that tariffs are pushing the consumer-facing costs of goods higher, resulting in climbing inflation figures. Kashkari also cautioned that the US economy is pivoting harder into a "soft landing" scenario.
Kashkari avoided using the "stagflation" word, but rising inflation in an economic downturn could spark a sticky mess that the Fed lacks adequate policy tools to entirely avoid or solve quickly.
Key highlights
The Fed is not done with work to bring inflation back to 2%.
Inflation is still too high, but the labor market is showing signs of cooling.
The Fed is getting into a tricky situation with mandates.
Data suggests the economy is slowing and moving to a soft landing.
Goods inflation is rising because of tariffs.
We need to watch tariff-related inflation to see if it's persistent.
Job market breakeven might now be 75k jobs per month.
I am skeptical that AI is showing up in economic data.
The Fed relies heavily on government-produced economic data.
The US remains the world's most competitive economy.
I feel good about the US maintaining reserve currency status.
We have every reason to believe there will be a gentle cooling in the economy.
Interest rates have some room to come down gently.
I'm not forecasting a recession.
I'm confident independent Fed can control inflation pressures.
Author
Joshua Gibson
FXStreet
Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.
