Fed Chair Jerome Powell is expected to signal where interest rates will be headed during a highly anticipated speech in Jackson Hole, Wyoming on Friday. Many expect the Fed to continue to raise interest rates in a bid to tame inflation that was running at a 40-year high.
"The big fear that I have in the back of my mind is if we’re [Fed] wrong and markets are wrong and that this inflation is much more embedded at a much higher level than we appreciate or markets appreciate," Kashkari said at a Wharton Club of Minnesota alumni event on Tuesday. "Then we’re going to have to be more aggressive than I anticipate... we will have to be even more hawkish than I am envisioning right now."
The Fed has hiked interest rates by 225 basis points since March in a bid to battle inflation, which is running at the highest in four decades.
Inflation, as measured by the Consumer Price Index, grew by 8.5% during the year to July after expanding at a four-decade high of 9.1% in the 12 months to June.