(Bloomberg) -- Federal Reserve Bank of Minneapolis President Neel Kashkari said the top figures from the latest consumer price report confirm inflation is headed down toward the central bank’s 2% target.
Kashkari, who spoke just minutes after the release of the October consumer price index, emphasized he hadn’t been able to look at the data in detail yet. Still, based on the headline numbers, the Minneapolis Fed chief said he’s confident about the trajectory of inflation.
“Right now, I think that inflation is headed in the right direction. I’ve got confidence about that, but we need to wait,” Kashkari said Wednesday during an interview with Bloomberg Television. “We’ve got another month or six weeks of data to analyze before we make any decisions.”
A key gauge of underlying inflation rose 0.3% for a third straight month, according to data from the Bureau of Labor Statistics Wednesday. The overall CPI, which includes food and energy, increased 2.6% from a year earlier, accelerating for the first time since March.
Policymakers lowered the benchmark lending rate by a quarter percentage point last week, their second consecutive cut. Interest rate projections released after officials’ September gathering implied the median Fed official saw quarter-point reductions at both the November and December meetings.
In recent weeks, investors have dialed back their expectations for the pace and depth of rate reductions following firm inflation figures and strong economic growth.
That economic resilience has led Kashkari to question where the neutral rate — a rate that neither stimulates nor restrains the economy — is for the last year or two, he said. Kashkari reiterated how higher productivity, if sustained, could mean neutral is higher than once thought.
Some economists also expect future policies from president-elect Donald Trump could add to inflationary pressures.
Kashkari said Tuesday it would require a dramatic change in the inflation outlook for the Fed to pause its rate cuts next month, adding that it would be difficult for the labor market to heat up substantially between now and the December meeting.
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