world-economy

Minneapolis Fed Chief Kashkari Signals Rate Hike Coming in 2026

Minneapolis Federal Reserve President Neel Kashkari reversed his monetary policy outlook Friday, now expecting one interest rate increase before year-end. Previously, he had anticipated a rate cut instead.

Kashkari's shift reflects persistent inflation pressures beyond energy costs. The Commerce Department reported headline inflation reached 4% using the Fed's preferred gauge, while core inflation climbed to 3.4%—the highest since October 2023. Inflation has remained above the Fed's 2% target for five years.

The policymaker cited Middle East tensions as a key factor limiting confidence that energy-driven price surges will ease soon. "In March, I had penciled in one rate cut by the end of the year. In June, I've changed that to one rate hike," Kashkari said at the Aspen Ideas Festival.

His comments came a week after the Federal Open Market Committee held rates steady.