According to Reuters on May 4, Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said economic uncertainty has increased because of the war involving Iran, making it harder for the Fed to give clear signals about the direction of future rates.
He said that if disruptions to crude oil supplies through the Strait of Hormuz persist, inflation pressures could intensify. In that case, he indicated, policymakers should factor in not only the possibility of rate cuts but also rate hikes.
Kashkari also said the Federal Open Market Committee should revise its policy language. Bloomberg reported that he said the Fed needs to make clear to markets that the next rate move could be either a cut or a hike.
He suggested that language that only leaves the door open to future cuts does not adequately reflect surging oil prices and inflation uncertainty.
At its April meeting, the Fed held its benchmark rate at 3.50% to 3.75%, but its statement retained some wording that left open the possibility of future cuts.
Kashkari, Cleveland Fed President Beth Hammack and Dallas Fed President Lorie Logan opposed that wording, underscoring renewed differences within the Fed over the path of rates.
* This article has been translated by AI.
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