Fed’s Kashkari: June rate hike/pause decision “is close”

The president of the Federal Reserve of Minneapolis, Neel Kashkari, said Monday that the decision on whether to raise interest rates at the US central bank meeting in June or to pause “is at odds”.

Speaking to CNBCKashkari also said that services inflation continues “quite ingrained” and “we may have to go beyond 6%” to return it to the Fed’s 2% target.

Earlier in the month, the fed raised rates for the tenth consecutive time, placing its overnight reference rate between 5% and 5.25%.

In their monetary policy statement, the authorities opened the door for a pause in hikes while they assess the response of inflation and see to what extent the recent stress in the banking system could contribute to the tightening of conditions designed by the fed.

kashkaria 2023 voting member of the rate-setting Federal Open Market Committee who has emerged as one of the toughest officials in the past year, said there was still little evidence in his district that system problems bankruptcy triggered by the March bankruptcy of Silicon Valley Bank have had a demonstrable impact on the availability of credit.

In an essay published Monday, kashkari – who led the Troubled Asset Relief Program during the 2007-2009 financial crisis – reiterated his call for regulators to impose stricter capital requirements on US banks.

If the SVB and the other banks that recently collapsed had had “significantly more equity, its depositors would have been comfortable that the banks could have absorbed their losses from market to market“, wrote kashkari.