Minneapolis Fed President comments on inflation

Minneapolis Federal Reserve Bank President Neel Kashkari said he believes inflation will reach 3% to 3.8% by the end of this year, well above the Fed’s 2% target. The Fed’s rate hikes and the potential pullback in credit after two bank failures last month could trigger a recession, but allowing inflation to remain high would be even worse for the labor market, Minneapolis Federal Reserve Bank President Neel Kashkari said Tuesday. “The tightening of credit conditions because of our monetary policy actions and this banking stress could trigger an economic downturn. That could even lead to a recession,” Kashkari said in a speech at Montana State University. But “we need to get inflation down. “If we can’t do that, then the employment outlook is really tough,” he said. Kashkari said pricing in bond markets reflects expectations that inflation will fall quickly, allowing the Fed to cut interest rates. But Kashkari said he’s not so optimistic and believes inflation, currently at 5% by the Fed’s preferred measure, will reach a range of 3% to 3.8% by the end of this year, well above the Fed’s 2% target.