Fed rate hike odds hit 46% as Kashkari warns on inflation

Minneapolis Fed President Neel Kashkari backed gradual interest rate increases as persistent inflation and uncertainty around the Strait of Hormuz complicate the outlook for US monetary policy. Summary Polymarket traders assigned a 46% probability to a 25-basis-point increase in September. Kashkari said the Fed should start raising rates gradually to bring inflation toward its 2% goal. The Fed held its benchmark rate at 3.50%–3.75% in July despite three dissenting votes. Bitcoin traded near $64,700 as crypto investors assessed the risk of tighter US liquidity. Kashkari calls for gradual Fed rate hikes Kashkari said during a CNBC interview on Wednesday that the central bank should begin moving interest rates higher as inflation remains above its target. “I think now is the time to start slowly moving rates up,” Kashkari said. The Minneapolis Fed president argued that current monetary policy does not appear particularly restrictive. He pointed to strong corporate earnings and continued economic resilience as signs that higher borrowing costs have not placed substantial pressure on demand. Kashkari clarified that he was not advocating a series of aggressive increases. Instead, he supp...