Kashkari warns inflation has spread beyond oil shock

Minneapolis Federal Reserve President Neel Kashkari said inflation remains unacceptably high, with price pressures spreading well beyond energy markets disrupted by the Iran war.

“The inflation that the American people are feeling every day is much beyond just oil prices. It’s in all aspects of the economy,” Kashkari said on Fox News’ Sunday Morning Futures.

His comments followed the Federal Reserve’s unanimous decision to raise its benchmark interest rate by a quarter percentage point to a range of 3.75% to 4%. It was the central bank’s first rate increase since 2023. Kashkari had favored raising rates at the Fed’s previous meeting in July.

For investors, Kashkari’s warning suggests interest rates may remain elevated or rise further if inflation persists across services and other parts of the economy. That prospect could pressure bonds, rate-sensitive stocks and richly valued growth companies while supporting the dollar and financial firms that benefit from higher rates.

Kashkari said the Fed cannot resolve geopolitical disruptions but can use monetary policy to prevent broader inflation from becoming entrenched. He previously warned that delaying action could eventually force the central bank to impose more aggressive tightening.

Despite inflation and trade uncertainty, Kashkari described the U.S. economy and labor market as resilient.

“My hope is, as some of those conflicts go to the background, that the growth can really take over and hopefully bring inflation down,” Kashkari said. “Hopefully disinflation can take over, which will make the Fed’s job a lot easier.”