Kashkari Holds Firm on Rate Path Despite Soft August Inflation Reading

Minneapolis Federal Reserve President Neel Kashkari reaffirmed his hawkish stance on interest rates, despite a softer-than-expected inflation reading in August. The personal consumption expenditures (PCE) price index showed core prices rising 3% annually, which Kashkari deemed 'elevated' and not significantly altered by the new data.

Kashkari's remarks offered little comfort for mortgage brokers, who had been hoping for a more dovish approach from the Fed. The central bank has already raised its benchmark rate to between 3.75% and 4%, and Kashkari indicated that another hike is still on the table before year-end.

The Minneapolis Fed president emphasized that the labor market remains strong, with private employers adding 90,000 jobs in September, exceeding analyst expectations. However, this strength only serves to underscore the need for continued inflation control, according to Kashkai's view.