On Wednesday, Breitbart posted an article about the cause of the level of inflation Americans are currently dealing with.
The article quotes Neel Kashkari, who runs the Federal Reserve Bank of Minneapolis.
The article reports:
Surging immigration is keeping inflation and interest rates high, Fed honcho Neel Kashkari said in an interview with the Telegraph.
Kashkari, who runs the Federal Reserve Bank of Minneapolis, said he’s not ready to consider cutting rates until he sees “several months of real progress on inflation.” The flood of immigrants, he argued, is hindering that progress.
U.S. borrowing costs are likely to stay put for “an extended period of time,” Kashkari warned.
He’s particularly freaked out by the booming demand for housing, which just won’t cool off despite sky-high rates.
Kashkari’s immigration bombshell runs directly contrary to the claims by the Biden administration and its allies that surging immigration is keeping down inflation by depressing wages.
Kashkari said that “dramatic increase in immigration” is boosting housing demand. More people working from home and years of underbuilding aren’t helping either. It’s a perfect storm that’s keeping the housing market red-hot.
The article concludes:
He (Kashkari) also noted that services inflation had been “much stickier” in the past few months, making it even tougher to justify rate cuts.
“In the second half of last year, we saw very rapid disinflationary progress, and that was comforting for all of us because the economy was strong and inflation was falling quickly. I expected and hoped that that was going to continue in the first quarter of this year [but] inflation has more or less moved sideways,” Kashkari said.
Like other Fed officials, Kashkari said he needs solid proof that inflation is heading back to 2 percent before he’s comfortable with rate cuts.
“I want to see evidence that inflation is headed well back down towards the 2 percent target. I’m not saying that we have to get all the way back down to 2 percent before we start cutting, but I need to be convinced that that’s where we’re headed before I would be comfortable normalizing interest rates,” he said.
Rate cuts could result in people feeling better about the economy (a good thing in an election year), but they could also create even more inflation.