Fed’s Kashkari Says U.S. Inflation Is Still Too High Across the Economy

Minneapolis Federal Reserve President Neel Kashkari said Sunday that inflation remains too high across the U.S. economy, arguing that the problem extends well beyond rising oil prices.

Speaking to Fox News’ Sunday Morning Futures, Kashkari said that even after excluding volatile energy and food prices, underlying inflation remains above the Federal Reserve’s desired level.

The comments come after the Federal Reserve recently raised its benchmark interest rate by a quarter percentage point to a range of 3.75% to 4.00%. Kashkari supported that decision. According to projections released after the meeting, all but two Fed policymakers expect at least one additional quarter-point rate increase before the end of 2026.

Oil prices add to inflation concerns

Oil prices have surged amid escalating conflict involving the United States and Iran and disruptions around the Strait of Hormuz. The region is critical to global energy shipments, raising concerns that higher energy costs could feed into prices for transportation, goods and services.

Kashkari stressed, however, that the Fed cannot directly control geopolitical disruptions or reopen shipping routes. Instead, its monetary-policy tools are aimed at broader inflation pressures throughout the economy.

Services remain a concern

Kashkari pointed specifically to inflation in the services sector, saying price pressures remain widespread even when energy and food are removed from the calculation.

His comments echo concerns from Fed Chairman Kevin Warsh, who said after the latest policy meeting that too many categories of prices were still increasing at rates above 3%. Warsh estimated that the inflation measure closely watched by the Fed could have been around 3.6% in August, although the official figure had not yet been released at the time of his comments.

The Federal Reserve’s longer-term inflation target remains 2%, meaning policymakers still have work to do to bring price growth down.

U.S. economy remains resilient

Despite inflation, tariffs, trade tensions and conflicts overseas, Kashkari said the U.S. economy has continued to grow at a solid pace. He also pointed to signs of improving productivity.

His hope is that as geopolitical conflicts ease, economic growth and improving productivity could help inflation gradually decline without requiring prolonged restrictive monetary policy.

What it could mean for Americans

Persistent inflation could keep pressure on household budgets, particularly if energy prices remain elevated. It could also influence the Federal Reserve’s decisions on interest rates, affecting borrowing costs for mortgages, credit cards, businesses and other loans.

For now, Fed officials are balancing two competing concerns: bringing inflation back toward 2% while avoiding unnecessary damage to economic growth.

The key question is whether inflation will cool on its own — or whether the Fed will need to keep interest rates higher for longer.