Minneapolis Fed boss Neel Kashkari has warned interest rates must go higher and for longer to bring inflation under control
Federal Reserve Bank of Minneapolis CEO Neel Kashkari said he's not ready to say the Federal Reserve will stop hiking interest rates. AFP

The Federal Reserve may hike rates one more time, according to a voting member of the Federal Open Markets Committee.

On Tuesday, Neel Kashkari, president and CEO of the Federal Reserve Bank of Minneapolis, made a public appearance at the APi Group Corp.'s (NYSE: APG) Global Controllers Conference in Minneapolis. There, he told attendees he's not ready to say the Fed is done hiking rates, but he is "seeing positive signs."

Neel Kashkari participates in Q&A at APi Group's Global Controllers Conference in Minneapolis (MinneapolisFed/YouTube)

"We may be on our way," Kashkari said. "We can take a little bit more time to get some more data in before we decide whether we need to do more."

Kashkari said the Fed will continue to monitor inflation and other macroeconomic indicators as it weighs altering rates again. At the most recent FOMC meeting, the body raised the target range of the federal funds rate by .25% to a range of 5.25% to 5.5%, the highest such rate in 22 years.

On the inverse, Kashkari said the Fed is "a long way away from cutting rates" because core inflation is still near 4%. The central bank needs to be confident it has inflation under control before modifying rates downward. However, he doesn't see that as a possibility until 2024 at the earliest.

The latest consumer price index report from the Bureau of Labor Statistics, released on Aug. 10, indicated year-over-year inflation rose by 3.2%. It was slightly up from June's 3.0%.

The Fed, and the U.S. economy as a whole, is shooting for a so-called soft landing of bringing inflation down to a more normal rate of 2% without a recession in between.

As for a recession, Kashkari said he believes the economy is "still quite strong." The unemployment rate, about 3.5%, is near a 50-year low and the labor market is still strong.

The U.S. economy, he said, keeps exceeding growth expectations and Americans are willing to spend disposable income on travel and entertainment.

"The fundamentals of the economy are still very strong," Kashkari said."I don't see any evidence that says we have a recession around the corner."

He did, however, caution that monetary policy often hits the economy with a lag, meaning the full impacts of the recent interest rate actions by the Fed may not fully materialize for six months or a year.

"Might there be more slowdown still in the pipeline so to speak? It's certainly possible and it's a hard thing to know with any certainty," Kashkari said.

The FOMC will meet again in late September. Economic analysts are split on whether a final rate hike will be meted out at the convocation.