Federal Reserve Bank of Minneapolis CEO and President Neel Kashkari said Sunday that the current inflation situation is “very troubling” and “spreading more broadly across the economy.” “It’s very concerning. We continue to get inflation readings, new data coming in just last week, and we continue to be surprised. It’s higher than we expect,” Kashkari said during an appearance on CBS’ “Face The Nation “. “And it’s not just a few categories. It’s more widespread throughout the economy, and that’s why the Federal Reserve is acting with such urgency to get it under control and get it back on track.” Cascari pointed out that while wages are rising for many Americans, so are the costs of goods and services, meaning workers are experiencing a “real wage cut” because inflation is rising so quickly. He said wage inflation is not happening and the cost of goods is partly due to disruptions in the supply chain, specifically caused by the pandemic and now the war in Ukraine. “For most Americans, their wages are going up, but they’re not going up as fast as inflation, so most Americans’ real wages and real incomes are going down,” he said. “They’re taking a real pay cut because inflation is rising so fast. I mean typically, we think of wage-driven inflation where wages are rising rapidly and that leads to higher prices in a self-fulfilling spiral — that’s not happening yet. High prices and wages they are now trying to cover these high prices. These high prices are now due to supply chains and the war in Ukraine, among other factors. And so we have to bring the economy back into balance before that actually happens from a story of inflation leading to very salaries”. POWELL COMMITS FED IS ‘FOCUSED’ ON TACKLING INFLATION Minneapolis Federal Reserve Bank President Neel Kashkari visits “Maria Bartiromo’s Wall Street” at the Fox Business Network studios on March 29, 2019, in New York City. (John Lamparski/Getty Images/Getty Images) Noting recent economic cost index results, he said it’s good that Americans are earning more, but the Federal Reserve can’t wait for the supply chain to adjust to lower prices. “Just at its basic level, inflation is when demand exceeds supply. We know that supply is low because of supply chains, because of the war in Ukraine, because of COVID. We were hoping that supply would come online faster. This it didn’t happen,” Kashkari said. “So we have to reduce the demand in the balance. Now, I hope we get some supply-side help, but that doesn’t change the fact that the Fed has a job to do, and we’re committed to doing it.” “We can’t wait until supply is fully healed. We have to do our part in monetary policy,” he added. Kashkari argued that the new bill introduced by Sens. Chuck Schumer, DN.Y., and Joe Manchin, DW. Va., called the inflation-reducing law “not going to have much of an impact on inflation” over the next several years, and it will be the job of the Federal Reserve to adjust monetary policies to bring it down. Moderator Brian Cheung and banker Neel Kashkari attend the Yahoo Finance All Markets Summit at Union West Events on October 10, 2019, in New York City. (Jim Spellman/Getty Images/Getty Images) “In the short term, the demand side effects completely overwhelmed the supply side effects. And so when I look at a bill that your two senators talked about, my guess is that over the next couple of years, they’re not going to have a big impact on inflation,” he said. It’s not going to affect how I analyze inflation in the coming years. I think in the long term it might have some effect, but in the short term we have a sharp mismatch between demand and supply, and it’s really up to the Federal Reserve to be able to reduce that demand.” The White House has repeatedly refused to admit that the US economy is in recession and has debated the definition of the term. On Sunday, Kashkari argued that inflation is so bad that it doesn’t matter if we call it a recession or not, and serious work needs to be done to tackle it. GET THE FOX BUSINESS ON THE GO BY CLICKING HERE “Basically, the labor market seems to be very strong, while GDP, the amount the economy produces, seems to be contracting. So we’re getting mixed messages from the economy. From my perspective, in terms of controlling inflation, whether we’re technically recession or not, it doesn’t change my analysis,” he said. “I’ve focused on the inflation data. I have focused on salary data. And so far, inflation continues to surprise us to the upside. Wages continue to rise. So far, the job market is very, very strong. And that means whether we’re technically in a recession or not doesn’t change the fact that the Federal Reserve has its own job to do.” “We are a long way from achieving an economy that is back to 2% inflation. And that’s where we need to get,” Kashkari added.
