Minneapolis Fed's Kashkari Says US Inflation Is Spreading Beyond Oil Across Economy

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said inflation pressures in the US are spreading beyond the oil-price shock stemming from the Iran war and into the broader economy, including services, underscoring the need to restore price stability.

Bloomberg reported on September 20 that Kashkari, in an interview with Fox News' "Sunday Morning Futures," said the inflation Americans feel every day is not limited to oil prices but extends across every part of the economy.

The Federal Reserve unanimously decided at its September 15-16 Federal Open Market Committee meeting to raise its benchmark interest rate by 0.25 percentage point. It was the first rate increase since 2023, aimed at curbing inflation that has remained above the Fed's 2% target for more than five years.

Concern has recently grown inside the Fed that price pressures are not confined to items directly affected by conflict in the Middle East or by tariffs. Kashkari also said inflation pressures are appearing in the services sector.

Bringing inflation back to target is the Fed's job, he said, adding that policymakers have the tools to achieve it.

Kashkari was one of three officials who dissented at the Fed's July meeting, when the central bank held rates steady, arguing instead for an increase. At the time, he warned that waiting too long to raise rates risked entrenching high inflation and forcing the Fed to tighten more aggressively later.

He was relatively upbeat on the US economy, saying it has shown strong resilience despite geopolitical tensions and trade issues and that the labor market remains solid.

"I hope some of these conflicts ease, growth really gains momentum, and inflation comes down at the same time," he said. "If disinflation takes hold, the Fed's job will become much easier."