Kashkari says the Federal Reserve may need to raise interest rates further to curb inflation

Minneapolis Federal Reserve President Kashkari stated that in order to curb the economy and inflation, the Federal Reserve is still expected to further raise interest rates, but he does not have a strong view on whether action should be taken at the October meeting. His previous forecast was another 25 basis point rate hike this year and another increase in 2027, but since the September meeting, the U.S. economy has performed better than he expected and inflation remains too high. If the economy continues to be unusually strong and inflation proves to be more persistent than anticipated, interest rates may need to rise to higher levels than currently expected. Kashkari believes the current healthy labor market and good economic performance indicate that monetary policy "may not be particularly restrictive." He also noted that recent market volatility has not yet caused systemic risk, and the U.S. Treasury market can normally absorb the repricing of interest rates.