Fed's Kashkari says inflation is too high in 'all aspects' of the economy, not just oil

Minneapolis Federal Reserve President Neel Kashkari said on Sunday that inflation is running too high across the whole economy, not only in energy, pushing back on the idea that the current spike is a Middle East oil story the Fed can look through.

Speaking on Fox News' "Sunday Morning Futures," Kashkari said price pressure remains elevated even after stripping out the volatile categories. "The inflation that the American people are feeling every day is much beyond just oil prices. It's in all aspects of the economy. It's in the services sector, for example, widely. So we have tools to bring that back down," he said, according to Reuters, which reported the interview.

Why this matters for the rate path

Kashkari supported last week's unanimous vote to raise the federal funds target range by a quarter point to 3.75%-4%, confirmed in the FOMC statement of September 16. He is not a reluctant convert to that view: Reuters noted he was one of three officials who dissented at the previous meeting in favor of a hike, when the majority of the committee chose to hold.

That matters because the central question for traders right now is whether the Fed treats an oil-driven jump in prices as temporary. Kashkari's answer was that it cannot, because the problem is broader. He also drew a clear line around what monetary policy can and cannot do, saying the Fed's job is to return inflation to its 2% target and that there is nothing it can do with interest rates to reopen the Strait of Hormuz or bring crude down.

Crude has surged as hostilities widened, with attacks on tankers in the Strait of Hormuz and the closure of Saudi Arabia's East-West pipeline, Reuters reported. West Texas Intermediate was at $99.89 a barrel and Brent at $104.20 in Sunday evening trading on the levels shown on our markets page.

The numbers behind the concern

Kashkari's comments echo those of Fed Chairman Kevin Warsh after Wednesday's decision. Warsh said inflation on the gauge the Fed uses for its 2% target was likely around 3.6% in August, a figure that has not yet been published officially. "Too many categories are still posting increases above 3 percent, on both a six- and 12-month basis," Warsh said at his post-meeting press conference, per the Reuters account.

Projections released with the decision showed all but two policymakers expect at least one more quarter-point increase this year. Reuters reported that rate futures put roughly a two-in-three chance on the funds rate ending 2026 in a 4% to 4.25% range, with a strong likelihood of at least another quarter point beyond that by the middle of 2027.

Bond yields already reflect a good deal of that. The 10-year Treasury yield finished Friday at 5.01% and the 2-year at 4.76%, up from 4.94% and 4.67% on Thursday, according to U.S. Treasury data.

The other half of his message

Kashkari was not describing an economy in trouble. He said growth has held up well despite the tariff and trade fight and the conflicts in Ukraine and Iran. "The American economy has been very resilient," he said, adding that the country has been "growing at a good clip, and productivity is showing some signs of improving." His hope, he said, is that as those conflicts recede, disinflation takes over and makes the Fed's job easier.

What comes next

The data calendar is light early in the week and then gets busier. The S&P Global flash composite PMI lands on September 23, with a prior reading of 56, and weekly jobless claims follow on September 24, with 196,000 the week before. The bigger tests are at the turn of the month, including the September jobs report on October 2, and the consumer price report on October 14. Our week ahead for futures traders has the full list.

For borrowers and small businesses, the practical read is unchanged by one interview: officials are still describing inflation as too broad to ignore, and the projections still point to at least one more increase this year rather than relief.

Sources: Reuters report of Kashkari's remarks on Fox News "Sunday Morning Futures," September 20, 2026; Federal Reserve FOMC statement, September 16, 2026; U.S. Treasury daily yield curve for September 18; live commodity levels captured September 20. This is market information, not investment advice.