Kashkari: Expected that the Federal Reserve will raise interest rates once this year.

U.S. Federal Reserve Bank of Minneapolis President Neel Kashkari said he expects the Fed to raise interest rates once this year, and keep rates unchanged next year.

Kashkari said that, given the continued economic impact of inflation surging due to the conflict in the Middle East and other factors, he has changed his prior expectations and now estimates that the Fed will need to raise rates once this year. In March, Kashkari had predicted that the Fed would cut rates once by the end of this year.

U.S. inflation has been above the Fed’s 2% target for five consecutive years. Earlier released data showed that in May, the personal consumption expenditures (PCE) price index rose 4.1% year over year, the highest level since April 2023. During the same period, the Fed’s preferred inflation gauge—the core PCE price index—rose 3.4% year over year, also setting a new high since October 2023.