Federal Reserve (Fed) Bank of Minneapolis President Neel Kashkari flashed another policy warning sign on Wednesday, cautioning that tariffs are pushing the consumer-facing costs of goods higher, resulting in climbing inflation figures. Kashkari also cautioned that the US economy is pivoting harder into a "soft landing" scenario.

Kashkari avoided using the "stagflation" word, but rising inflation in an economic downturn could spark a sticky mess that the Fed lacks adequate policy tools to entirely avoid or solve quickly.

Key highlights

The Fed is not done with work to bring inflation back to 2%.
Inflation is still too high, but the labor market is showing signs of cooling.
The Fed is getting into a tricky situation with mandates.
Data suggests the economy is slowing and moving to a soft landing.
Goods inflation is rising because of tariffs.
We need to watch tariff-related inflation to see if it's persistent.
Job market breakeven might now be 75k jobs per month.
I am skeptical that AI is showing up in economic data.
The Fed relies heavily on government-produced economic data.
The US remains the world's most competitive economy.
I feel good about the US maintaining reserve currency status.
We have every reason to believe there will be a gentle cooling in the economy.
Interest rates have some room to come down gently.
I'm not forecasting a recession.
I'm confident independent Fed can control inflation pressures.