By Ann Saphir
(Reuters) - With inflation higher and lasting longer than expected, the Federal Reserve needs to take its foot off the monetary gas pedal "a little bit" to address imbalances between supply and demand, Minneapolis Fed President Neel Kashkari said on Friday.
"The way we bring that into balance is, we will tend to tighten monetary policy by raising interest rates," Kashkari told NPR News in his first public comments since the Fed met earlier this week and signaled it will begin to raise rates in March.
"That would then not tap the brakes on the economy, but it would let our foot off the accelerator just a little bit," he said, adding that "we just don't know" how many rate hikes that will take.
He blamed much of the upward price pressure on the pandemic, which has tangled supply chains and kept workers out of the labor force
"A lot of the reason that prices are high right now are temporary factors related to the COVID," Kashkari said. "The hope is that as the supply chains sort themselves, out some of these price pressues will naturally relieve themselves. And that means the Federal Reserve will have to do less."
Asked how many rate hikes will be needed, Kashkari pointed to Fed policymakers' forecasts from December signaling three rate hikes in 2022.
"We have to see how the data comes out," he said. "We just don't know - it's going to depend on what happens to supply chains, what happens to workers."