Minneapolis Federal Reserve President Neel Kashkari indicated that signs of widespread inflation led him to project one interest rate increase this year in the Fed's forecast released earlier this month.
In an interview with Bloomberg News on Friday at the Aspen Ideas Festival in Colorado, Kashkari expressed his concerns, stating, "I'm concerned about inflation, and it's not just about the Middle East situation, but also signs of broader inflationary pressures in the economy."
After remaining largely unchanged in 2025, inflation showed signs of cooling again at the start of the year but has surged significantly over the past three months. While the conflict in Iran has pushed up oil prices, prices for many other categories of goods have also risen. This has heightened concerns among some Fed officials who believe inflationary pressures may be more pervasive and stubborn, potentially requiring more forceful action from the central bank.
Kashkari acknowledged a U.S.-Iran ceasefire agreement but noted that Iran appeared to have violated it overnight. U.S. President Donald Trump stated on Friday morning that Iran had attacked cargo ships in the Strait of Hormuz.
"I don't trust Iran," Kashkari said. "To what extent will they comply with the agreement? To what extent will markets—including the oil market, fertilizer market, and other related markets—return to normal, or will they experience a prolonged period of stress and uncertainty?"
The interest rate projections released after the Fed's policy meeting last week showed that nine out of 19 policymakers expect at least one rate hike this year. This has prompted markets to increase their bets on a Fed rate increase within the year.
Kashkari mentioned he is not necessarily in a hurry to raise rates and does not anticipate further hikes in 2027—he expects the Fed to maintain policy unchanged by then—but he emphasized wanting to observe subsequent data first. He had previously forecast one rate cut for this year.
Later in the day during a panel discussion, Kashkari stated that policymakers are committed to bringing inflation back to the Fed's target level.
"How do we bring inflation down within a reasonable timeframe without causing significant damage to the labor market?" Kashkari said. "That's the challenge we are grappling with."
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