During a panel discussion hosted by the Minnesota Chapter of the Women Corporate Directors, Minneapolis Fed President Neel Kashkari said that the Federal Reserve will not be able to pause its campaign of interest rate hikes when the benchmark rate hits 4.5% to 4.75% if “underlying” inflation is still accelerating.

Kashkari said, “Core services inflation — which is the stickiest of all — keeps climbing, and we keep getting surprised on the upside. If we don’t see progress in underlying inflation, or core inflation, I don’t see why I would advocate stopping at 4.5, or 4.75, or something like that.”

Kashkari has said he could easily see the key rate reaching the “mid-4s” by early next year. Presently the key rate sits at 3% to 3.25% after an aggressive series of hikes raising it from near zero as inflation accelerated at the fastest rate in 40 years. Officials had indicated last month they foresaw the rate rising to about 4.9% next year, something confirmed by the prices of futures contracts.

The October 13 Labor Department report which showed core CPI rise 6.6% in September year over year has increased expectations the Federal Reserve will announce its fourth straight 75 basis point rate hike after the November 1-2 meeting. September marked the second straight month of acceleration in the core measure, after several months of moderate readings.

Before the pandemic the Minneapolis Fed chief was widely seen as a monetary dove. However since the explosion of inflation this year, he has become one of the bigger policy hawks. He has repeatedly emphasized that policymakers “need to bring demand down” to fight inflation.

Kashkari said, “This inflation didn’t come from the labor market. This inflation came from supply chains and energy and commodities,” adding, “Do we actually have a tight labor market? One way I would define a tight labor market is: Labor is in a relatively strong position, and their share of the pie is growing. Their share of the pie is shrinking. So, I don’t know.”