Minneapolis Federal Reserve President Neel Kashkari has reversed his previous dovish stance, stating he now expects the central bank to implement at least one interest rate increase this year.
The shift marks a notable hardening of tone from a Fed official who had previously signaled patience, underscoring the committee's ongoing struggle with persistent inflation pressures.
Kashkari emphasized that curbing inflation remains the central bank's top priority, even as he described the labor market as 'in decent shape.
US Treasury yields rose on the news, with the 10-year yield climbing as traders recalibrated expectations for the federal funds path.
The 2-year yield, which is more sensitive to near-term policy shifts, also ticked higher, reflecting the market's reassessment of the likelihood of a tightening cycle resuming before year-end.
Kashkari emphasized that curbing inflation remains the central bank's top priority, even as he described the labor market as 'in decent shape.' His comments come just over a week after the Federal Open Market Committee held rates steady, highlighting the internal divergence among policymakers regarding the appropriate policy stance.
The reversal adds to the growing chorus of hawkish voices within the Fed, complicating the narrative for investors who had been pricing in a series of rate cuts.