US Central Bank Member: Inflation Remains High in All "Aspects" of the Economy

Kashkari supported the unanimous decision last week to raise interest rates by a quarter percentage point to a range of 3.75 percent – 4.00 percent.

Kashkari was one of three dissenting officials at the previous Federal Reserve meeting, where they supported raising interest rates while the majority of the Federal Open Market Committee members chose to keep them unchanged.

Expectations released with the interest rate hike decision showed that all Federal Reserve policymakers, except two, expect at least another quarter-point increase this year.

Interest rate futures markets reflect a 66.7 percent probability that 2026 will end with the Federal Reserve's benchmark interest rate in the range of 4.00-4.25 percent, with a strong likelihood of at least another quarter-point increase by mid-2027.

*Middle East Conflict Raises Oil Prices

Crude oil prices surged sharply after the escalation of hostilities, as both the United States and Iran attacked and sank oil tankers in the Strait of Hormuz, and Saudi Arabia closed its vital east-west pipeline due to airstrikes in the escalating Middle East war.

Kashkari said the Federal Reserve's mission is to bring inflation back to the central bank's target level of two percent, and there is nothing it can do about interest rates that would lead to the opening of the Strait of Hormuz or lower oil prices.

He added, "The inflation that the American people feel every day goes far beyond just oil prices. It is present in all aspects of the economy. It is widespread in the service sector, for example. So, we have tools to reduce it… We hope to get some help from other parts of the government or from other aspects of the real economy."