Kashkari Says Further Rate Hikes Possible If Inflation Fails to Cool

Minneapolis Fed President Neel Kashkari said the central bank may need to raise interest rates again if inflation does not improve, underscoring a continuing debate inside the Federal Reserve over how much additional tightening is warranted. His remarks follow the Federal Open Market Committee's decision to hold the federal funds target range at 3.50% to 3.75%. Kashkari dissented at the last meeting, favoring a 25 basis point increase. Key takeaways - Kashkari's comments reinforce that inflation remains a core concern for some policymakers and that additional hikes are still on the table. - Market pricing appears to give less weight to a near-term pause after his statement, reflecting uncertainty around the Fed's next steps. - Current pricing suggests reduced expectations for a pause-cut-pause path over coming meetings. What to watch Attention will turn to upcoming Fed meetings and incoming inflation data, including the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE), which could shape the decision on whether to resume rate increases. Markets will also scrutinize public remarks from senior officials—including Chair Kevin Warsh and other FOMC members—for signals that support or push back on Kashkari's view. The September FOMC meeting is expected to be a key test of whether the Fed opts to hike again or stay on hold.