Minneapolis Fed President Flags Persistent Inflation Despite Cooler Data

At a Council on Foreign Relations gathering in New York, Minneapolis Federal Reserve President Neel Kashkari told CNBC’s Steve Liesman that inflation “is still too high,” even though the latest August personal consumption expenditures (PCE) price index came in below economists’ expectations. Kashkari’s remarks followed the release of the core PCE figure, which excludes food and energy, and a round of data on consumer spending and gross domestic product that he described as showing a “resilient” economy.

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• The core PCE index reported an annual growth rate of 3 %, lower than the forecast but still above the Fed’s long-term target.

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• Management-services firm ADP announced that private-sector payrolls grew more than economists had predicted for the month.

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Kashkari emphasized that multiple inflation measures point to a rate “around a 3 % rate.” He also said the labor market appears “pretty good” but falls short of “great,” reflecting a balance between price stability and employment. The Federal Reserve, earlier this month, delivered its first interest-rate hike in three years and indicated that another increase could be forthcoming.

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• “There are many different measures of inflation, but it's running at around a 3% rate,” — Neel Kashkari, federal reserve president

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• “It's been elevated now for more than five years. I didn't think the inflation data today really changed that story for me very much.” — Neel Kashkari, federal reserve president

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Kashkari’s comments suggest that, despite recent data softening, the Fed remains cautious about declaring inflation under control. The acknowledgment of a still-elevated price environment, combined with signals of possible further rate hikes, underscores the central bank’s commitment to tempering inflation even as the economy shows signs of strength in payroll growth and consumer activity.

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