Minneapolis Federal Reserve Bank president Neel Kashkari stated on Monday that the fact that the US core inflation is making rapid progress in returning to the 2% target suggests that the Fed is making significant progress in its inflation fight. However, he added that the data are not unambiguously positive, and there are some signs of economic weakness.
Kashkari also said that the constellation of economic data suggests to him that the current stance of monetary policy may not be as tight as assumed, taking into account the low neutral rate environment that existed before COVID. "It is possible, at least during the post-pandemic recovery period, that the policy stance that represents neutral has increased," the official noted, adding that this, in his view, gives the Fed time to assess upcoming economic data before starting to cut rates, with less risk that too-tight policy is going to derail the economic recovery.