Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said the US inflation rate remains too high and urged the Fed to raise interest rates gradually starting now to bring inflation under control [1, 2, 3]. Kashkari dissented from the Federal Open Market Committee's (FOMC) decision in August 2026 to keep the federal funds rate steady at 3.5%-3.75%, instead supporting a quarter-point hike [1, 2, 3]. He was one of three FOMC members to prefer raising rates this month rather than pausing.
Kashkari emphasized a cautious approach, preferring small, steady rate increases to avoid later aggressive hikes. "Now is the time to start slowly moving up as we get more data in," he said [1]. He added that raising rates three times before the end of 2026 "is not impossible" if inflation stays elevated or worsens [1, 3]. Kashkari noted that current monetary policy is likely not restrictive enough to reduce inflation to the Fed's 2% target, with the latest US inflation rate measured at 3.7% year-over-year in June 2026 [1, 3]. "I'm not calling for a dramatic increase in interest rates. I'm simply saying I don't see evidence monetary policy is marginally restrictive right now," he told CNBC on August 5 [2].
Kashkari plans to review upcoming economic data before the September 15-16 FOMC meeting to decide on policy direction [1, 3]. He said Fed Chair Kevin Warsh, who took office in May 2026, encouraged him to "do what I think is best for the economy" [1].
Other Fed officials are divided on whether current rates are already restrictive. Philadelphia Fed President Anna Paulson and others view the current rate range as modestly restrictive, while Kashkari and some colleagues argue rates need to rise gradually [3]. Fed Governor Lisa Cook also said inflation remains too high and that she is ready to back rate hikes if inflation pressures do not ease [3]. "If inflation pressures don't start to ease, I am prepared to support higher short-term rates," Cook said.
Kashkari reiterated his stance in interviews with The Edge Malaysia on August 6 and Yahoo Taiwan on August 12, confirming the Fed faces internal divisions on policy amid persistent inflation risks [1, 2, 3]. His dissent highlights tension within the 12-member FOMC after the August decision to hold rates steady.
The next FOMC meeting on September 15-16 will be key as Kashkari and others await fresh inflation and economic data before adjusting policy. Kashkari's comments suggest potential for resuming gradual rate hikes if inflation does not ease.
