#KashkariSaysInflationStillTooHigh

Kashkari’s comments add another layer to the Fed story, because the concern is no longer being framed purely as an oil-price shock. Reuters reports that Minneapolis Fed President Neel Kashkari said inflation remains too high even after excluding volatile energy and food, with price pressure broadening into services. He also supported last week’s unanimous 25bp hike that lifted the policy range to 3.75%–4.00%.

For markets, that distinction matters. If inflation were being driven mainly by oil, the Fed could potentially look through part of the shock because monetary policy cannot produce more crude. But if services and other categories are also staying firm, the argument for maintaining restrictive policy becomes stronger. Reuters also reported that Kashkari believes the Fed has the tools to return inflation to its 2% target.

The bigger question is October. The 56.5% hike probability you quoted should be treated as a market-implied probability, not a Fed forecast. More importantly, the Fed's latest communication does not make an October hike a certainty. After the September decision, reporting indicated that 16 of 19 policymakers expected at least one additional 25bp increase this year, but that increase could come at either the October or December meeting. Chair Kevin Warsh also emphasized the need to see the inflation trend develop before deciding the next move.

That creates a difficult setup for risk assets. If October hike expectations continue climbing, Treasury yields can remain under pressure and liquidity-sensitive assets such as BTC and high-beta altcoins could face volatility. On the other hand, if incoming inflation data cools enough to reduce the perceived need for an immediate October move, markets could quickly price out some of that tightening expectation.

The key data now is therefore not just what Kashkari says. Watch the next CPI/PCE readings, services inflation, wages, employment, oil prices and Treasury yields together. MUFG recently highlighted that August CPI had interrupted the earlier disinflation momentum, while also noting that non-housing services inflation had been comparatively muted.

For crypto, I would watch BTC around the $80K area, but I would not attribute every BTC move directly to the Fed. Crypto is also being driven by ETF flows, positioning, leverage, liquidation levels and broader risk appetite.

My read is that the Fed has moved from a debate about whether inflation is temporary toward a much more data-dependent fight against persistent inflation. Kashkari's comments make an October cut look less compatible with the current inflation narrative, while the actual decision still depends on the data arriving before the meeting.

The market's next major test is simple: does the inflation data confirm Kashkari's concern, or does it give the Fed enough evidence to pause after September? That answer could matter more for BTC and risk assets than the 56.5% probability itself.