Minneapolis Fed President Neel Kashkari said in a speech, “while I believe it is too soon to definitively declare that inflation has peaked, we are seeing increasing evidence that it may have .”
“In my view, however, it will be appropriate to continue to raise rates at least at the next few meetings until we are confident inflation has peaked,” he added.
The second step of inflation fighting would be “pausing to let the tightening we have already done work its way through the economy”. He sees interest rate pausing at 5.4%, but “any sign of slow progress that keeps inflation elevated for longer will warrant, in my view, taking the policy rate potentially much higher.”
The third step of inflation fighting is “to consider cutting rates only once we are convinced inflation is well on its way back down to 2 percent”.
But he warned, “Given the experience of the 1970s, the mistake the FOMC must avoid is to cut rates prematurely and then have inflation flare back up again. That would be a costly error, so the move to cut rates should only be taken once we are convinced that we have truly defeated inflation.”
