Kashkari says time to start gradually raising rates to curb inflation

Federal Reserve Bank of Minneapolis President Neel Kashkari said the Fed should begin moving rates higher gradually because current policy may not be restraining the economy enough, extending his hawkish stance after he joined two other dissenters at the most recent FOMC meeting. His argument was challenged by a weaker-than-expected nonfarm payrolls report: payrolls fell 23,000 versus forecasts for an 85,000 gain, average hourly earnings rose 0.1% against a 0.3% estimate, and the unemployment rate edged down to 4.1% from 4.2%. FedWatch pricing flipped after the data from a 55.7% implied chance of a hike to 57.9% odds of no change. State Street's chief economist Simona Mocuta and Harvard professor and former Obama economic adviser Jason Furman said housing weakness, tighter long-term borrowing costs and tariff- and energy-driven price shocks suggest policy may already be above neutral, with wage trends still short of a price-wage spiral.