Kashkari Says Inflation Is "Still Too High" Despite Softer PCE Reading

A cooler-than-expected inflation reading did not change the core message from one of the Federal Reserve's regional bank presidents. In an exclusive interview with CNBC's Steve Liesman on Wednesday night, Neel Kashkari said inflation is still too high, even after the latest Personal Consumption Expenditures price data came in softer than economists had forecast. The PCE index is the inflation measure the Fed watches most closely, so a downside surprise usually draws attention on trading desks and in policy circles. Kashkari's point was that one better-than-expected print does not amount to a turning point.

The distinction matters for how markets should read the report. A single month of softer data can reflect noise, timing quirks or temporary swings in categories like travel and goods. Policymakers generally want to see price pressures ease consistently before they feel confident that inflation is moving back toward the Fed's 2% target. Kashkari's comments suggest that threshold has not yet been reached.

The labor market got a more positive assessment. Kashkari described conditions as "pretty good," which signals that employment is holding up and does not, on its own, point to the kind of deterioration that would push the central bank toward faster rate cuts. Taken together, a resilient job market and inflation that remains elevated give policymakers reason to move carefully. That combination is the main reason the Fed has been reluctant to declare victory over price increases.

For investors and households, the takeaway is that the path to lower rates is unlikely to be quick or automatic. Any move toward easier policy will probably depend on several more months of cooler inflation data, not just one encouraging report. Kashkari's remarks are a reminder that the central bank is still weighing the risk of stopping too early against the risk of holding policy tight for too long.