Fed's Kashkari: More rate hikes ahead, and possible recession

Minneapolis Federal Reserve Bank President Neel Kashkari on Wednesday said he is sticking to his view that the U.S. central bank will need to raise its policy rate another 1.5 percentage points this year and more in 2023, even if that causes a recession.

The Fed is "far, far away from declaring victory" on inflation, Kashkari said at the Aspen Ideas Conference, despite the "welcome" news in the consumer price index report earlier in the day that inflation may have begun to cool.

Kashkari said he hasn't "seen anything that changes" the need to raise the Fed's policy rate to 3.9% by year-end and to 4.4% by the end of 2023. The rate is currently in the 2.25%-2.5% range.

Although Kashkari acknowledged that raising rates so quickly could push the economy into recession, and that a recession could even occur in the "near future," he said that risk will not deter him. "We have to get back to 2%" inflation, he said.

Consumer prices rose 8.5% in July from a year earlier, the Labor Department report showed on Wednesday.

Kashkari also pushed back on market expectations for rate cuts to begin early next year, saying they are "not realistic." Rates are not likely to be cut "until we get convinced that inflation is well on its way" to the Fed's 2% target, he said.