With new Fed Chair Kevin Warsh settling into his office for his first week on the job, Neel Kashkari told Nikkei that the Fed could ultimately embark on a series of rate hikes if inflation pressures tied to the turmoil in the Middle East continue to build.
If the current storyline persists — with oil and gas prices staying elevated, inflation expectations continuing to climb, and the stock market pushing higher — the Fed and Warsh could find themselves in an increasingly difficult position. Higher energy prices risk feeding into broader inflation pressures at a time when financial conditions are not tightening materially if equities continue to rally.
The challenge for policymakers is that no one knows how long the conflict will last
Fed’s Kashkari: The Fed could embark on a series of hikes in response to inflation.
