Fed Official Says Inflation Is Still Too High

Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, said on Wednesday that inflation is still "too high." He made these comments after a government agency released new data showing that prices are still rising faster than the Fed's goal. Kashkari spoke at a Council on Foreign Relations event in New York City. He told a reporter from CNBC that the new numbers did not change his view very much.

The new data came from the Bureau of Economic Analysis, which is a government agency that tracks the economy. It showed that annual inflation, measured by something called the Personal Consumption Expenditures price index, or PCE, was 3.4 percent in August. The Federal Reserve's goal is to keep inflation at 2 percent or below. So even though inflation has come down from its peak, it is still above that target.

Inflation has been above 2 percent since March 2021. It hit a 40-year high of 9.1 percent in June 2022, using another measure called the Consumer Price Index. Kashkari pointed out that high prices have been a problem for more than five years. He said the new data did not show enough change to shift his thinking about what needs to happen next.

The Federal Reserve tries to control inflation by raising interest rates. Higher interest rates make it more expensive to borrow money, which can slow down spending and help bring prices down. Last month, Kashkari and all 11 of his colleagues on the Federal Open Market Committee, or FOMC, voted to raise interest rates by a quarter of a percentage point. The FOMC is the group inside the Fed that makes decisions about interest rates.

Other Fed officials have also said that more rate increases may be needed. Fed Governor Michael Barr said on Tuesday that further policy changes are "likely to be needed" to bring inflation down to the 2 percent target. Anna Paulson, president of the Federal Reserve Bank of Philadelphia, said last week that "some modest further tightening may be warranted." Both officials signaled they are watching the data closely before making their next decisions.

Even with high inflation, Kashkari said the U.S. economy has shown it is "resilient," meaning it is strong and able to bounce back from problems. The economy grew at a rate of 2.2 percent in the second quarter of this year, which was higher than an earlier estimate of 1.5 percent. Kashkari said it is "remarkable" how well the economy has held up despite challenges like tariffs on imported goods and conflicts in the Middle East. He said he will keep watching the data to decide what steps the Fed should take next.