Neel Kashkari, Speech: Q&A at Hometown Helena Event in Helena, Montana

“Well, I feel quite confident… I shouldn’t say that. I’m hopeful that inflation will be well on its way back down and that we will all have a lot more comfort that we’ve got this genie back in the bottle. It won’t be back to our 2% target by then, but I’m hopeful that it’ll be well on its way back down with some confidence behind that. The question’s going to be how strong is the economy? How strong is the labor market? Are there still a lot of jobs available? And that’s the risk that people, a lot of economists are talking about is monetary policy is a blunt instrument. Already, I’ll give you an example.” 

“So we have raised interest rates, but you can see the repricing of mortgages happen even faster than we raised interest rates because markets are forward looking. So when we tell them, “Hey, we’re shifting to a tougher stance on interest rates,” markets price that in right away, and you see a big adjustment. So mortgage rates have gone from 3 to almost 6% just in a few months. That is going to put some brakes on the housing market. Housing is one of the sectors that gets most directly affected by monetary policy.”