Federal Reserve official Neel Kashkari said the U.S. economy remains broadly strong and resilient despite tariffs, the conflict in Iran, and high interest rates. Consumer spending and the labor market remain healthy, although housing and other interest-rate-sensitive sectors are under pressure.
Kashkari said strong AI investment is increasing demand for capital, which could keep interest rates higher for longer. He emphasized that the Fed remains focused on bringing inflation back to its 2% target, while acknowledging uncertainty over how high rates may need to go.
He also noted that higher yields are already affecting housing, investment, and financial markets. While Kashkari does not believe rising unemployment is necessary to bring inflation down, he said the Fed must remain prepared for different economic outcomes while balancing its inflation and employment mandates.
