Fed's Kashkari warns that tariffs are pushing up goods prices
Federal Reserve (Fed) Bank of Minneapolis President Neel Kashkari flashed another policy warning sign on Wednesday, cautioning that tariffs are pushing the consumer-facing costs of goods higher, resulting in climbing inflation figures. Kashkari also cautioned that the US economy is pivoting harder into a "soft landing" scenario.
Kashkari avoided using the "stagflation" word, but rising inflation in an economic downturn could spark a sticky mess that the Fed lacks adequate policy tools to entirely avoid or solve quickly.
Key highlights
The Fed is not done with work to bring inflation back to 2%.
Inflation is still too high, but the labor market is showing signs of cooling.
The Fed is getting into a tricky situation with mandates.
Data suggests the economy is slowing and moving to a soft landing.
Goods inflation is rising because of tariffs.
We need to watch tariff-related inflation to see if it's persistent.
Job market breakeven might now be 75k jobs per month.
I am skeptical that AI is showing up in economic data.
The Fed relies heavily on government-produced economic data.
Source : Fxstreet
