Minneapolis Fed President Neel Kashkari is urging the Federal Reserve to start raising interest rates as early as September, warning that delaying action could force steeper hikes later if inflation spirals. He argues current policy isn’t sufficiently cooling the economy, citing strong profits, resilient consumer spending, and a tight job market. Joining him in advocating for a rate hike were Dallas and Cleveland Fed presidents—though the majority of the committee voted to hold steady. Kashkari believes supply chain snarls, tariffs, and AI spending are fueling prices, and small, gradual increases are preferable to crisis-driven moves. Meanwhile, Philadelphia Fed President sees rates as already mildly restrictive, highlighting internal Fed divisions. Notably, Chair Powell gave Kashkari explicit freedom to vote his conscience—a rare dissent since his tenure began, underscoring growing debate over the best path to tame inflation without derailing growth.
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