Neel Kashkari, Interview: Minnesota Housing Partnership

Inflation

“So we have tools to bring demand down by raising interest rates to bring the economy back into balance. So we have to do that because if we were to lose control of inflation and people would lose confidence that inflation was going to return, it actually ends up leading to much worse economic outcomes that some people might recall from the 1970s.”

Banking Crisis

“Banking panics and banking stresses tend to take longer than you think until in the ’08 eight. It took a couple of years. I’m not forecasting that. I don’t think we have that situation here, but every time in ’08, we thought, “Okay, we’re through it. There was another shoe yet to drop.” So I’m prepared that this could take a little longer than we expect until we fully get behind it, but the banking supervisors are very focused on it, and the vast majority of banks have taken potential interest rate risk seriously and have positioned themselves for that.”

Inflation Expectations

“There are lags … Estimates are from six months to a year to two years before the full effects of our interest rate increases, work their way through the broader economy.”