Fed's Kashkari says inflation is still too high despite softer PCE reading

What happened

Federal Reserve official Neel Kashkari said inflation remains too high, even after a PCE inflation reading that came in softer than expected. He also described the labor market as being in pretty good shape.

Why it matters

Remarks from Fed policymakers on inflation and employment are read as clues about how the central bank is weighing its two goals. When an official stresses that price pressures remain elevated while the jobs market is holding up, markets reassess expectations for the path of interest rates.

Shifts in those rate expectations tend to move the dollar and short-term yields first, and they flow through to gold, which is sensitive to real rates and the currency, and to equity indices, where valuations depend on discount rates. Any divergence between incoming inflation data and official commentary can keep that repricing active.

What to watch

Further Fed commentary on the inflation outlook and labor conditions, including follow-up remarks from Kashkari, alongside upcoming PCE inflation releases and labor market indicators that policymakers cited as central to their assessment.