Minneapolis Federal Reserve Bank President Neel Kashkari said on Tuesday his biggest fear is that the U.S. central bank misreads the extent and persistence of price pressures and will need to deliver even more aggressive rate hikes to control inflation.
Kashkari is already the most hawkish of all the central bank’s 19 policymakers and expects the Fed to need to lift its policy rate, now at 2.25 percent–2.5 percent, another two full percentage points by the end of next year.
“The big fear that I have in the back of my mind is, if we are wrong and markets are wrong and that this inflation is much more embedded at a much higher level than we appreciate or markets appreciate, then we are going to have to be more aggressive than I anticipate, probably for longer, to bring inflation back down,” Kashkari said….