Fed: We are committed to restoring price stability — Nel Kashkari

Federal Reserve Bank of Minneapolis President Neel Kashkari made remarks on Tuesday.

He has said that US central bankers are united in their determination to do what needs to be done to bring down inflation, and the financial markets understand that.

“There’s a lot of toughening going on,” Kashkari said in an interview with WSJ Live.

“We are committed to restoring price stability, but we also recognize, given these lags, that there is a risk of overshooting upfront, and so I think we are moving at an appropriately aggressive pace.”

key notes

The markets understand what the Fed is doing.

Fed officials are united and committed to reducing inflation.

The degree of demand will be determined in part by the supply side.

We are committed to restoring price stability, and the markets understand that.

We are moving very aggressively.

There are many adjustments in progress.

There is a risk of exaggeration.

We move at a suitably aggressive pace.

We have to see the progress, which is yet to be seen.

That makes me think we have more work to do.

We need to continue to tighten policy until we see convincing evidence that core inflation has peaked and is heading down.

So we should sit down and pause.

Past mistakes of cutting rates will not be repeated once the economy weakens.

The political stance is strict now.

I’m not sure the policy is strict enough.

High inflation is fueled in part by rising demand, supply problems and Russia’s invasion of Ukraine.

He has no interest in forecasting the stock markets.

Update of the dollar and US values

Meanwhile, US stocks have tried to turn around but remain under pressure in a risk environment. An early rally in equities faltered after St. Louis Fed officials James Bullard and Chicago Fed President Charles Evan advocated further rate hikes, even at the risk of slow economic growth.

The benchmark SP500 index erased gains of up to 1.7% in the early afternoon and hit lows last seen in late November 2020.

The US dollar, as measured by the DXY index, is trading again near daily highs at 114.47.