By Matt Grossman

Minneapolis Fed President Neel Kashkari wrote Friday that heightened inflation risks from the Iran war led him to object to the Federal Reserve policy statement that followed this week's meeting, because the statement implied that the Fed's next move is likely to be a rate cut.

Before the Iran war began, Kashkari wrote in essay, he was confident that inflation was on track to cool gradually. But now, an oil-market shock that shows no signs of easing is threatening to fuel more price increases, he wrote.

"If the Strait of Hormuz remains closed, it is hard to see how oil, gas and other important commodities produced in the Middle East could find alternative routes to market," Kashkari wrote.

Given the risk that rising energy prices could extend a long stretch of above-target inflation, the Fed shouldn't be signaling that its next move is more likely to be a cut, Kashkari wrote.

"I believe the FOMC should offer a policy outlook that signals that the next rate change could be either a cut or a hike, depending on how the economy evolves," he wrote.

Kashkari was one of four Fed voters to object at the Fed's April meeting, making Jerome Powell's last policy decision as Fed chair one of the most contentious in decades. One voter, governor Stephen Miran, continued to call for lower interest rates, as he had for the previous five meetings. But two other regional Fed presidents, Beth Hammack of the Cleveland Fed and Lorie Logan of the Dallas Fed, joined Kashkari in advocating for more agnostic forward guidance.

The Fed's postmeeting statement used the phrase "in considering the extent and timing of additional adjustments" to refer to the Fed's next potential rate move. Because the Fed's most recent moves have been cuts, "additional adjustments" has been understood to imply that the next move would likely be a cut as well.

Write to Matt Grossman at matt.grossman@wsj.com

(END) Dow Jones Newswires

May 01, 2026 08:36 ET (12:36 GMT)

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