Kashkari Flips Rate Outlook to Hike on Inflation Surge
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- Neel Kashkari flipped his 2025 rate call from one cut to one hike, telling the Aspen Ideas Festival that he's skeptical energy-driven inflation will abate soon amid renewed Middle East tensions.
- The Fed's preferred inflation gauge hit 4.1% headline (highest since April 2023) with core at 3.4% (highest since October 2023), keeping inflation above the 2% goal for a fifth straight year.
- Kashkari tied the surge to multiple supply shocks separately: tariffs on imported goods, fertilizer and oil disruptions from the Strait of Hormuz, and hundreds of billions in annual data-center and infrastructure spending.
- Kashkari cited President Trump's claim that Iran is violating a ceasefire as a reason he sees no 'all clear' from the Middle East, saying 'I don't trust Iran to honor whatever agreement has been made.'
- John Williams (New York Fed) pushed back, saying he expects inflation to ease and current policy is well-positioned — exposing a visible split on the FOMC.
- Austan Goolsbee (Chicago Fed) said he remains concerned about inflation but declined to say where he sees rates heading, leaving the committee's direction unsettled.
- Kashkari is a voting FOMC participant in 2025, giving his hawkish pivot direct weight in upcoming rate decisions.
Why it matters: Kashkari is a voting FOMC member in 2025, so his hawkish tilt — directly contradicting his March expectation of a cut — carries immediate weight even as colleagues like Williams signal patience and Goolsbee dodges the question, leaving a visibly split committee to decide whether 4.1% headline inflation demands further tightening or a wait-and-see stance.
