The president of the Federal Reserve Bank of Minneapolis (the Minneapolis Fed) says its economists “keep getting surprised” after each new inflation report.
Appearing on the CBS program “Face the Nation” Sunday, Neel Kashkari acknowledged that inflation continues to inflict the entire U.S. economy at a rate “higher than we expect.”
Calling inflation “very concerning,” Kashkari added that even though wages and incomes are nominally increasing, the rate of inflation is higher still.
“For most Americans, their wages are going up, but they’re not going up as fast as inflation. So most Americans’ real wages, real incomes are going down,” he said.
Minneapolis Federal Reserve President: "We keep getting surprised” by new inflation data.
“It’s higher than we expect and it’s not just a few categories. It’s spreading out more broadly across the economy.” pic.twitter.com/fWygB8HFtI
— RNC Research (@RNCResearch) July 31, 2022
Last week the Federal Reserve raised interest rates by a 0.75 percentage point for a second consecutive time in an effort to keep fighting inflation. The current federal funds rate now sits at 2.25%-2.5%, its highest since late 2018.
By raising rates another 0.75 percentage point, the Fed is trying to adopt an aggressive posture toward inflation while also avoiding the damage that too high of a rate increase could cause.
Conventional economic wisdom states that getting inflation under control, and thus dealing with the specter of a temporary recession, is significantly better in the long run than letting inflation run unchecked.
The Federal Reserve has also made headlines of late over a report alleging that China has been attempting to infiltrate the central bank. The report, written by congressional Republicans on the Senate Homeland Security and Governmental Affairs Committee, accuses the Chinese government of seeking to “gain influence” and information, and the Fed itself for failing “to combat this threat effectively.”
Fed Chair Jerome Powell denounced the report as “unfair, unsubstantiated, and unverified.”
One former employee of the Minneapolis Fed, however, told Alpha News that Chinese international students at the University of Minnesota had unsupervised access to the building “for years.”