- Interest-rate hikes aren't out of the question, Minneapolis Fed President Neel Kashkari said.
- "If we get surprised by the data, then we would do what we need to do," he said.
- Most central bankers favor a policy pause as they wait for inflation to fall towards the 2% target.
As markets debate the timing of when interest rates could finally ease, investors shouldn't be so sure rate hikes won't resume.
According to Minneapolis Federal Reserve Bank president, Neel Kashkari, monetary policy is likely restrictive enough for now, but no central banker can say with certainty that more rate hikes are completely out of the question.
"I don't think anybody has formally taken them off the table, even me," he said during a Tuesday presentation in London, and later added: "Of course, if we get surprised by the data, then we would do what we need to do."
All of this is determined by how far away inflation is from the Fed's 2% target, which every central banker is committed to reaching, Kashkari said. In that spirit, most of his colleagues are for now set on keeping monetary policy unchanged as they await more clarity on the direction of consumer prices in the US.
Kashkari agrees with this approach. In a separate interview with CNBC on Tuesday, he stressed that there's no hurry to cut rates.
"The most recent inflation print that we got on the CPI data was marginally better than the earlier prints from the first three months, but it's still not where we needed to get to," he said, continuing: "I think we're right now we're in a good position because the labor market remains strong in the US. So we have the luxury of being able to sit here until we gain confidence on where inflation is headed."
Still, though outlooks have shifted throughout this year, markets still expect inflation to fall low enough for rate cuts to emerge in 2024. As of Tuesday, investors are pricing in an interest rate pivot by November.