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Fed Kashkari: US economy in a completely unbalanced situation

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Minneapolis Fed President Neel Kashkari said yesterday that the US economy is in a “completely unbalanced situation” of “maximum employment” and “very high inflation”. He said, “it’s very clear: We need to tighten monetary policy to bring things into balance.”

“When inflation is 8% or 9%, we run the risk of unanchoring inflation expectations and leading to very bad outcomes that would cause us to have to be very aggressive — Volcker-esque — to then re-anchor them,” he said.

“We needed to err on making sure we are getting inflation and only relax when we see compelling evidence that inflation is well on its way back down to 2%,” he added.

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