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Fed's Kashkari questioned the degree of policy restrictiveness
Fed's Kashkari questioned the degree of policy restrictiveness in an essay published on the Minneapolis Fed website. He is a nonvoter who has been leaning to the hawkish side. The disinflation process seen in late 2023 seems to have stalled out in Q1 and wondered if that process is still underway. He suggested the "resilience" in the housing market to the higher rates "raises questions about whether policymakers and the market are misperceiving neutral, at lease in the near term. He also indicated that he raised his forecast for the long-run neutral rate to 2.5% from 2.0% (it was lifted to 2.6% in the March dot plot, from 2.5% in December). Uncertainty over the neutral rate creates a "challenge" for the Fed, and he added they "must set policy based on where neutral is in the short run." He concluded that the Fed has more work to do to achieve the dual mandate goals. He will be speaking later today in a fireside chat.