Source: Jin10 Data

Minneapolis Fed President Kashkari said that it may take up to two years for US inflation to return to the Fed's target level, which is not far from the median expectation of the Fed. Kashkari said at the annual meeting of the Michigan Bankers Association that excessive wage increases are preventing the inflation rate from returning to the 2% target. When asked about the outlook for interest rates, Kashkari said his view was similar to recent guidance from other Fed officials. "Do you know what we're all basically saying? Everything depends on the economic situation," he said. Kashkari said that if inflation persists, rates will remain high for a long time, but if inflation falls, it means the Fed can normalize rates more quickly. "It will take more time to return to 2%, but I believe we will achieve this goal," Kashkari said, adding that the direction of interest rates will depend on the economy. The fundamentals of the US economy are still very healthy and strong, and he said he "hopes that this situation will continue." However, he also acknowledged that there were some signs of weakness in the US economy. "There is evidence that profit margins have declined." The consumer price index (CPI) in the United States rose 3.3% year on year in May, and 3.4% in April, according to data released earlier this month. On a monthly basis, driven by a drop in gasoline prices, the CPI's month-on-month growth rate remained unchanged at 0.3% in May. Kashkari said in an interview with CBS's "Face the Nation" on Sunday last week that he expected the Fed to cut interest rates once this year, but not until December. "It really depends on the data. We're in a really good place right now to take some time and get more inflation data, more economic data, more labor market data before making any decisions," he said. With regard to the proposal to increase the capital requirements for large banks by the Fed, Kashkari said he was surprised by the opposition to the plan. "Only 5-6 large banks in the United States are not the most ideal for the economy," he said. Kashkari was one of the most hawkish members of the Fed last year and has voting rights on the Federal Open Market Committee (FOMC) this year.

Kashkari said at the annual meeting of the Michigan Bankers Association that excessive wage increases are preventing the inflation rate from returning to the 2% target.

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Kashkari said that if inflation persists, rates will remain high for a long time, but if inflation falls, it means the Fed can normalize rates more quickly.

Kashkari said that it will take more time to return to 2%, but he believes that they will achieve this goal. The direction of interest rates will depend on the economy. The fundamentals of the US economy are still very healthy and strong. Kashkari also acknowledged that there are some signs of weakness in the US economy, such as declining profit margins.

There is evidence that profit margins have declined.

The US Consumer Price Index (CPI) rose 3.3% year on year in May and 3.4% in April, according to data released earlier this month. Monthly data shows that CPI's month-on-month growth rate remained unchanged at 0.3% in May, driven by a drop in gasoline prices.

Kashkari said in an interview with CBS's "Face the Nation" program on Sunday last week that he expected the Fed to cut interest rates once this year, but not until December.

"It really depends on the data. We're in a really good place right now to take some time and get more inflation data, more economic data, more labor market data before making any decisions," he said.

Kashkari pointed out that he was surprised by the opposition to the Fed's proposal to increase the capital requirements for large banks. "Only 5-6 large banks in the United States are not the most ideal for the economy," he said.

Kashkari was one of the most hawkish members of the Fed last year and has voting rights on the Federal Open Market Committee (FOMC) this year.

Editor/Lambor