Minneapolis Federal Reserve President Neel Kashkari said the latest US inflation figures did not materially change his view that price pressures remain too high, keeping the possibility of further monetary tightening in play. Core personal consumption expenditures inflation was 3.0% in August, according to the data released Wednesday, while the broader PCE measure was reported at 3.4% from a year earlier. Reuters and The Wall Street Journal separately reported Kashkari’s comments after the release.
Kashkari said the larger surprise in the day’s economic data came from revisions showing stronger gross domestic product growth and a resilient consumer, the Journal reported. That combination matters for monetary policy because firm demand can make it harder for inflation to return sustainably to the Federal Reserve’s 2% objective. His assessment also pushed back against the idea that the softer core reading, by itself, represented a decisive shift in the inflation trend.
The comments followed the Federal Reserve’s September decision to raise the federal funds target range by a quarter percentage point to 3.75%-4.00%. The Journal reported that the decision was unanimous and that a majority of officials projected at least one additional rate increase this year. Kashkari said his September projection included two increases during 2026, one of which has already occurred, while stressing that the projection reflected information available at the time.
Reuters reported that Kashkari said further rate increases could be needed depending on how the economy evolves, as the central bank works to bring inflation back toward target. His remarks add to a policy debate in which officials are weighing still-elevated inflation against the timing of any next move. Market expectations for an October increase had eased after New York Fed President John Williams suggested the central bank could wait until December, with the Journal citing a 38.2% probability of an October move from CME’s FedWatch tool.
What it means for traders: Kashkari’s comments keep US interest-rate expectations sensitive to incoming data rather than confirming that the September increase marked the end of the tightening cycle. For USD/JPY, evidence of persistent US inflation or continued economic resilience could keep attention on the gap between US and Japanese interest-rate expectations. A further moderation in inflation, weaker activity or softer employment data would support the alternative scenario in which the Fed waits longer before deciding whether another increase is necessary.
The next focus is the September US employment report and subsequent public comments from Federal Reserve officials. Traders will also watch whether the headline and core PCE measures continue to diverge, how revisions affect the picture of household demand, and whether the next round of activity data supports Kashkari’s description of a resilient economy. Those releases will help determine whether the Fed’s October meeting remains a live decision or whether December becomes the more important policy date.