Fed's Kashkari: We are committed to restoring price stability


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Minneapolis Federal Reserve Bank President Neel Kashkari on Tuesday has crossed the wires as a chorus of Fed officials speak out to the public this week.

He has said US central bankers are united in their determination to do what needs to be done to bring inflation down, and financial markets understand that.

"There's a lot of tightening in the pipeline," Kashkari said in a WSJ Live interview.

"We are committed to restoring price stability, but we also recognize, given these lags, there is the risk of overdoing it on the front end, and so I think we are moving at an appropriately aggressive pace."

Key notes

Markets understand what Fed is doing.
    
Fed policymakers united and committed to bringing down inflation.
    
How much we need to do will be determined partly by the supply side.
    
We are committed to restoring price stability, and markets understand that.
    
We are moving very aggressively.
    
There is a lot of tightening in the pipeline.
    
There is the risk of overdoing it.
    
We are moving at an appropriately aggressive pace.
    
We need to see progress, not seeing it yet.
        
That makes me concerned that we have more work to do.
    
We need to keep tightening policy until we see compelling evidence that underlying inflation has peaked, heading down.
    
Then we need to sit there and pause.
    
Will not repeat the past mistakes of cutting rates once the economy weakens.
    
The policy stance is tight now.
    
Not sure the policy is tight enough.
    
High inflation is driven partly by the surge in demand, supply issues, and Russia's Ukraine invasion.

Has no interest in forecasting stock markets. 

US dollar and stocks update

Meanwhile, US stocks have attempted to turn around but remain pressured in a risk-off environment. An early rally in stocks faltered after Federal Reserve policymakers St. Louis Fed President James Bullard and Chicago Fed President Charles Evan advocated more interest rate hikes even at the risk of slowing economic growth.

The benchmark S&P 500  erased gains of up to 1.7% by early afternoon trading to hit lows last seen in late November 2020.

The US dollar, as measured by the DXY index, is back to trading near the highs of the day of 114.47.

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