Federal Reserve Bank of Minneapolis President Neel Kashkari stated in a CNBC interview on Friday that the central bank’s primary objective is to maintain stable inflation expectations, according to Reuters. He indicated a lack of current evidence suggesting an increase in long-run inflation expectations.
Kashkari suggested that a reduction in the trade deficit could potentially diminish the attractiveness of the U.S. as an investment destination, acknowledging the possibility of shifting investor preferences. He noted a significant divergence between current market conditions and those observed during the pandemic.
Furthermore, Kashkari expressed confidence in the Fed’s ability to manage economic transitions and mitigate dislocations, while acknowledging limitations in predicting ultimate yield levels, focusing instead on facilitating a smooth transition. He highlighted positive aspects within the Consumer Price Index (CPI) data.
Regarding tariffs, Kashkari suggested their potential inflationary impact necessitates vigilance to prevent the escalation of long-term inflation. He expressed reservations about adopting a “look-through” approach to tariffs’ inflationary effects given the persistence of elevated inflation.
Following these remarks, the US Dollar experienced downward pressure, with the USD Index declining 1.1% to 99.77 at the time of reporting.
