Kashkari's Candid Take: Inflation Remains 'Stubbornly High' Despite Easing Data

It was Wednesday, September 30, 2026, in the bustling heart of New York, as Minneapolis Fed President Neel Kashkari sat down with CNBC's Senior Economics Reporter, Steve Liesman. The conversation, part of the esteemed C. Peter McColough Series on International Economics hosted by the Council on Foreign Relations, quickly turned to the pressing matter on everyone's mind: inflation. And Kashkari's message? Crystal clear, yet nuanced: inflation, for all its recent dips, is "still too high."

Even with the softer-than-expected August personal consumption expenditures (PCE) price index data – core PCE inflation standing at 3.0% year-over-year – Kashkari wasn't quite ready to declare victory. He noted that this latest reading, while perhaps a sigh of relief for some, hadn't fundamentally altered his perspective. It's a tricky balance, you know, watching those numbers closely but also understanding the broader economic currents.

So, what does this mean for future interest rate policy? Well, Kashkari indicated that another rate increase isn't off the table entirely. The decision, as always, would hinge significantly on incoming economic performance. The Fed, after all, had just raised rates in September for the first time in three years, signaling their commitment to taming persistent price pressures. It’s a delicate dance, tightening policy just enough without stifling growth too much.

Indeed, the U.S. economy has shown a remarkable, almost stubborn, resilience. Consumers, despite grappling with higher prices for quite some time now, just keep spending. It’s a testament to the underlying strength, perhaps, but also a factor that keeps inflationary pressures simmering. The national unemployment rate, for instance, remains quite healthy at 4.1%, and even the ADP data for September showed the private sector added a respectable 90,000 jobs, hinting at continued labor market tightness.

It's worth noting that Kashkari himself had, in September, revised his estimate of the neutral federal funds rate upwards to 3.25%. This isn't just a technical adjustment; it reflects a belief that the economy can handle, and perhaps even needs, a higher baseline interest rate to keep things in check without becoming overly restrictive. It speaks to a subtle shift in how policymakers view the long-term equilibrium of the economy.

Of course, the economic picture is rarely painted with just domestic strokes. Kashkari’s discussion also touched upon external factors that continue to influence the outlook. Think about the impact of tariffs, the unpredictable ripples of geopolitical conflict, particularly in the Middle East, and even something as granular yet critical as diesel prices. These global elements, often beyond direct Fed control, can certainly complicate the inflation fight and the overall economic trajectory. Ultimately, it seems the Fed, and Kashkari in particular, remains vigilant, navigating a complex economic landscape where vigilance is the name of the game.