Neel Kashkari, president and CEO of the Federal Reserve Bank of Minneapolis, during the Bloomberg Invest event in New York, US, Tuesday, March 3, 2026.
Michael Nagle Bloomberg | Getty Images
Minneapolis Federal Reserve President Neel Kashkari said on Friday that he has changed his view and now expects a single interest rate hike this year.
In a statement more than a week after the Federal Open Market Committee voted to keep its rate on hold, Kashkari said he sees a potential hike this year as the economy continues to feel inflation related to the Middle East war and other factors.
“In March, I had penciled in a one rate reduction at the end of the year. In June, I changed that to one rate increase at the end of the year,” said the policymaker during a panel discussion at the Aspen Ideas Festival. “It’s a pencil, so we’ll have to see how the details fit in.”
A Commerce Department report earlier this week showed that core inflation as measured by the Fed’s preferred rate rose to 4.1%, the highest since April 2023. Stripping out food and energy costs, core inflation was 3.4%, also the highest since October 2023.
Inflation was above the Fed’s 2% target for five years.
Kashkari said his view on prices has changed as he is skeptical that rising costs caused by energy prices will slow down soon as unrest continues in the Middle East. President Donald Trump accused Iran on Friday of violating the ceasefire agreement.
“I don’t trust Iran to honor any deal that is made,” he said. “There’s some evidence that they’re already backing away from it, so I’m not seeing all the clarity coming out of the Middle East, and that makes me cautious about feeling pretty good that the worst is behind us.”
Although the increase in inflation is blamed on oil prices, Kashkari cited other factors.
“Inflation is driven by supply dynamics, so even if the prices increase the price of the goods we buy abroad, the fertilizers that are disrupted because of the Strait of Hormuz and the price of energy and oil in the Strait of Hormuz,” he said. “Then it’s also driven by huge investments, hundreds of billions of dollars a year in data centers and all the infrastructure that goes with that. Anything that affects those sectors, prices go up a lot in those parts of the economy.”
Early comments from policymakers coming out of the Fed meeting suggested divergent views on the FOMC, with Kashkari being a voting participant this year.
On Thursday, New York Fed President John Williams said he expects inflation to moderate and sees current policy as well-positioned to take advantage of current momentum. Meanwhile, Chicago Fed President Austan Goolsbee told CNBC he remains concerned about inflation but declined to speculate on where he sees rates headed.
Correction: Kashkari’s lectures were presented on Friday. The earlier version did not mention the date correctly.
