Federal Reserve’s Kashkari: A protracted war in Iran could trigger a “series” of rate hikes in the U.S.

According to Nikkei reports, Federal Reserve’s Kashkari stated that the Fed might implement a “series” of interest rate hikes in response to inflation issues triggered by the situation in the Middle East. During the FOMC meeting in late April, the Fed kept interest rates unchanged. Kashkari and two other officials opposed the decision to include wording in the Fed statement hinting at future monetary easing policies. In a written interview, Kashkari said, “I think the next rate adjustment could be a cut or a hike,” thereby expressing his differing view. Kashkari stated that the outcome depends on the trend of inflation, which hinges on whether the Strait of Hormuz will be reopened soon or will remain effectively closed due to further damage to infrastructure in the region, the latter exacerbating the global energy shortage. Kashkari said the concern is that long-term inflation expectations of businesses and households “may become unanchored.” He indicated that the FOMC “would likely need to respond forcefully,” and rate hikes, potentially even a series of hikes, may be necessary. (Jin Shi Data APP)