Kashkari: Inflation "Still Too High" Despite Cooler PCE Reading

Minneapolis Fed President Neel Kashkari struck a cautious tone on inflation Wednesday night, saying price pressures are "still too high" even after the latest PCE report came in cooler than economists had forecast.

Speaking in an exclusive interview with CNBC's Steve Liesman, Kashkari acknowledged the softer data but stopped short of treating it as a turning point. A single better-than-expected reading, he indicated, is not enough to conclude that the Fed has finished the job of bringing inflation back to its 2% target.

The PCE price index is the Fed's preferred inflation gauge, so the latest release carries real weight in policy discussions. A weaker print can strengthen the case for easing, but Kashkari's remarks suggest that policymakers want to see the improvement hold up over several months before changing their stance.

On the other side of the Fed's dual mandate, Kashkari had a more upbeat assessment. He described the labor market as "pretty good," pointing to a job market that is holding up and not showing signs of serious strain. That matters because a resilient labor market gives the central bank room to stay patient on inflation without immediate pressure to cut rates to protect jobs.

Taken together, the two messages paint a picture of an official who sees little urgency to move quickly. Inflation is moving in the right direction but has not reached the goal, and employment is healthy enough that the Fed does not need to rush.

For investors, the comments are a reminder that individual data surprises rarely change the Fed's thinking on their own. Markets that lean heavily on one soft inflation report may be getting ahead of policymakers, who have repeatedly stressed that they will follow the broader trend in the data. Kashkari's view is that the trend is encouraging but unfinished.

The remarks add to the ongoing debate inside the central bank over how fast to adjust policy. With inflation still above target and the labor market solid, officials like Kashkari appear comfortable taking a measured approach and waiting for more evidence before drawing firm conclusions.