Kashkari Seeks Gradual Rate Hikes to Tackle Inflation

Minneapolis Federal Reserve President Neel Kashkari is calling for a gradual increase in interest rates to combat inflation. In an interview with CNBC, he stated that 'now is the time to start slowly moving' rates up. The central bank official argues that higher interest rates are needed to bring down inflation and avoid more drastic increases later.

Kashkari was one of three dissenters at last week's Federal Open Market Committee meeting who voted for a quarter percentage point rate hike, but the other nine members disagreed. He believes that corporate earnings and consumer spending are strong, but says there is no evidence that monetary policy is restrictive enough to curb inflation.

The FOMC has been on hold all year as officials deliberate over the proper approach to policy with the labor market stabilizing but inflation holding above the Fed's 2% target. Inflation data in June showed some improvement, but Kashkari remains uneasy about the situation and thinks the Fed needs to address supply shocks pressuring consumers.

Kashkari emphasized that he is not calling for a dramatic increase in interest rates, just a gradual approach to get inflation back down. He believes it's better to start taking action now rather than waiting until later when the problem may be more entrenched and require aggressive rate hikes.