Fed's Kashkari (voter, hawkish) says inflation has come down but it is still above target; wage growth has softened somewhat

• Bank turmoil can be a source of slowing for the economy.


• Wage growth deceleration is mixed depending on income.


• Housing is a key issue for hiring new workers from other regions.

Q&A:

• When asked, says 2% inflation target is for the near future, could have a debate on an adjustment once we get back to 2%.


• Could imagine a higher wage growth equilibrium if productivity saw an upward shock, but are not seeing evidence of that.


• By most measures, labour market looks like it is at where it was pre-pandemic; not convinced we are at full employment.


• If markets are right that inflation will fall quickly, one would imagine rates could normalise.


• If high inflation is more embedded, rates will need to stay high for longer.


• Now on the more hawkish end of the Fed spectrum.


• On average, US household is financially healthy, but lower incomes have deteriorated.


• Not seeing evidence of an immediate crash in consumption.


• Once inflation comes down, expects a return to 2018 environment with similar neutral rates, low inflation and low rates.


• Inflation is coming down but "its been pretty darn persistent", means Fed has to "keep at it" for an extended period.

Analysis details (14:16)

• Kashkari is giving remarks at a Q&A at the Marquette CEO Townhall event.

11 May 2023 - 14:10- Fixed IncomeImportant- Source: Newswires