#KashkariSaysInflationStillTooHigh
The important macro signal today is not simply that the Fed raised rates. It is that policymakers are still seeing inflation pressure beyond the energy market.
Minneapolis Fed President Neel Kashkari said inflation remains too high across the U.S. economy, including areas beyond oil and energy. He specifically pointed to broad price pressures and services, reinforcing the argument that the inflation problem cannot be explained only by the recent energy shock.

That distinction matters for crypto and equities because an energy-driven inflation spike can potentially fade with oil prices, while persistent core inflation can keep monetary policy restrictive for longer.

The inflation scoreboard

The latest official data gives a clear picture:

CPI: 3.4% YoY in August
Core CPI: 2.9% YoY in August
Monthly CPI: +0.4%
Monthly core CPI: +0.3%

The Fed's inflation objective remains 2%, meaning headline CPI is still 1.4 percentage points above the target. Core CPI is also roughly 0.9 percentage point above it. August's gasoline increase contributed more than one-third of the monthly CPI rise, but core prices still increased 0.3%, which supports Kashkari's point that inflation is not exclusively an energy story.

The Fed's preferred PCE measure is also running above target. July PCE inflation was 3.7% YoY, while core PCE was 3.3%. Both increased 0.2% month over month.

So the macro gap currently looks like:

2.0% Fed target → 3.3% core PCE → 3.4% core CPI → 3.7% headline PCE

That is why the inflation debate remains relevant even after the latest rate decision.

The Fed has already moved

On September 16, the FOMC raised the federal-funds target range by 25 bps to 3.75%–4.00% in a unanimous 12–0 decision. The official statement said inflation remains elevated and that the move was intended to support a more timely return to the 2% goal.

The September projections added another layer: 16 of 18 officials who submitted projections saw at least one more 25-bp increase by year-end, while four projected two additional increases. The median end-2026 policy-rate projection moved to 4.1%.

That is a projection, not a commitment. Future decisions remain dependent on incoming inflation, employment and financial conditions.

Why oil does not tell the whole story

Brent has remained around the $100+ area, with Reuters reporting Brent around $102.08 on September 21 even after a 1.7% daily decline.

But the August CPI data shows the broader picture: energy rose 16.3% YoY, while core CPI still increased 2.9% YoY.

That creates two separate inflation channels:

Energy shock → headline inflation

Services/core prices → underlying inflation

Kashkari's argument is essentially that policymakers cannot assume the second problem disappears simply because oil prices eventually cool.

The bond market is already part of the signal

Treasury yields remain a critical transmission channel.

The 10-year Treasury yield reached about 5.00% after the September Fed decision, its highest level since 2007, while the 2-year yield reached around 4.73%, its highest since July 2024.

By September 17, the 10-year had briefly moved back below 5% to around 4.991%, showing how quickly bond markets are responding to changing expectations.

This matters because higher yields can tighten financial conditions even without another immediate Fed move.

What this means for risk assets

The first market reaction has been mixed rather than one-directional.

For the week ending September 18:

Nasdaq: +0.7%
S&P 500: -0.1%
Dow: -1.7%

On September 18 alone, Nasdaq gained 0.4% and the S&P 500 0.2%, despite the 10-year yield moving back toward 5%.

Bitcoin has meanwhile recovered back above $80K, trading around $81.6K in the latest market snapshot, while ETH has remained around the mid-$2,000s.

That tells me the immediate question for crypto is not simply “Fed hawkish or dovish?”

It is whether BTC and ETH can maintain momentum while real yields and Treasury yields remain elevated.

The macro setup to watch next

Inflation: CPI 3.4% / core CPI 2.9%
Preferred Fed gauge: PCE 3.7% / core PCE 3.3%
Fed target: 2%
Policy rate: 3.75%–4.00%
End-2026 median projection: 4.1%
Further-hike projections: 16/18
10Y Treasury: around 5%
Brent: ~$102
BTC: ~$81.6K

The key market relationship is now inflation → Fed expectations → Treasury yields → liquidity conditions → crypto/equity valuation.

Kashkari's message therefore matters beyond the inflation headline. If core inflation continues staying materially above 2%, the market has to keep pricing a restrictive policy environment even when growth remains resilient.

For BTC, ETH and growth stocks, the next confirmation will come from whether price strength can coexist with elevated Treasury yields and a Fed still focused on bringing inflation back toward 2%.

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