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Federal Reserve Bank of Minneapolis CEO says inflation is 'very concerning' and 'spreading out' across economy
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The Federal Reserve Bank of Minneapolis CEO and President Neel Kashkari said Sunday that the current state of inflation is "very concerning" and "spreading out more broadly across the economy."
"It’s very concerning. We keep getting inflation readings, new data that comes in as recently as this past week, and we keep getting surprised. It’s higher than we expect," Kashkari said during an appearance on CBS’ "Face The Nation." "And it’s not just a few categories. It’s spreading out more broadly across the economy and that’s why the Federal Reserve is acting with such urgency to get it under control and bring it back down."
Kashkari stressed that although wages are increasing for many Americans, so are the costs of goods and services, which means workers experience a "real wage cut" because inflation is growing so quickly. He said wage-driven inflation is not happening, and the cost of goods is partially due to disruptions in the supply chain, namely caused by the pandemic and now the war in Ukraine.
"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. "They’re getting a real wage cut because inflation is growing so quickly. I mean typically, we think about wage-driven inflation where wages grow quickly and that leads to higher prices in a self-fulfilling spiral – that is not yet happening. High prices and wages are now trying to catch up to those high prices. Those high prices are now being driven by supply chains and the war in Ukraine among other factors. And so we need to get the economy back into balance before this really does become from a very wage drive inflation story."
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