In an interview on CBS News's “Face The Nation,” Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, stated the Fed is laser-concentrated on slowing inflation.
“From my perspective, in terms of getting inflation in check, whether we are technically in a recession or not, doesn't change my analysis,” he announced.
“I'm focused on the inflation data. I'm focused on the wage data. And so far, inflation surprises us to the upside; wages continue to grow. So far, the labor market is very, very strong. And that means whether we are technically in a recession or not, doesn't change the fact that the Federal Reserve has its own work to do. And we are committed to doing it.”
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Kashkari stressed that inflation takes place when demand outstrips supply — and “we know supply is low because of supply chains, because of the war in Ukraine, because of COVID.”
“We hoped that supply would come online more quickly, that hasn't happened,” he stated. “So we have to get demand down into balance. …I hope we get some help on the supply side.”
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Kashkari further stressed despite a strong job market, Americans are essentially getting a wage cut because inflation is outpacing wage growth.
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“Typically we think about wage-driven inflation, where wages grow quickly,” he announced. “And then that leads to higher prices in a self-fulfilling spiral. That is not yet happening. High prices and wages are now trying to catch up to those high prices. Those high prices are being driven by supply chains and the war in Ukraine, among other factors. And so we need to get the economy back into balance before this really does become a wage-driven inflation story.”
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“For most Americans, their wages are going up, but they're not going up as fast as inflation,” he continued. “So most Americans, real wages, real incomes are going down. Families are finding it increasingly hard to make ends meet.”
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He said the Fed’s goal is to get inflation down to 2%.
“We’re going to do everything we can to avoid a recession, but we are committed to bringing inflation down, and we are going to do what we need to do,” Kashkari stated. “We are far from achieving an economy that is back at 2% inflation. And that’s where we need to get to.”
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