SCOTT DETROW, HOST:
We're going to hear a reaction to one of today's rulings, the ruling about the Federal Reserve. Neel Kashkari is president and CEO of the Federal Reserve Bank of Minneapolis. As we've heard the Supreme Court rule, the Federal Reserve Governor Lisa Cook can keep her job, following President Trump's move to fire her, at least for now. Neel Kashkari, thanks for joining us.
NEEL KASHKARI: Thanks for having me.
DETROW: What was your overall reaction to this decision?
KASHKARI: I was relieved. I was relieved when the majority opinion - or the majority of the court went to great lengths to explain why independent monetary policy, monetary policy independent of short-term political considerations, is not only of paramount importance for the economy today, but it's rooted in American history. And I was gratified that the court understood why that is so important.
DETROW: As we heard, though, this was a narrow decision, essentially, that Lisa Cook didn't receive due process. She could still be fired, theoretically, if the lower court determines she committed mortgage fraud, which she denies. Are you worried about that outcome?
KASHKARI: Well, I have to defer to the lawyers to sort out those details, but I think at the end of the day, the Supreme Court has clearly expressed its - you know, it segmented the Federal Reserve from all of the other independent or formally independent agencies. And it said that monetary policy has this unique history in America and it should be kept independent of the political process. The fact that the court so strongly reached that conclusion, which I, of course, agree with, that gives me great comfort that whatever may come forward, that they are going to do their best within the bounds of the law and the Constitution to keep the Fed independent. And I feel good about that.
DETROW: So despite the fact that this was a narrow ruling on the legal side of things, you feel like - you read this, you see this opinion, and you feel like this is a clear-cut vote for an independent Fed?
KASHKARI: Exactly. Yes.
DETROW: You know, I do want to ask. You and Governor Cook are both members of the Federal Open Market Committee, the group that meets eight times a year to set monetary policy, including interest rates. Have you discussed this case with her? Has she said anything to you about her concerns about this case as it played out?
KASHKARI: You know, Lisa is not only a colleague. She's a friend. I've talked to her a number of times on a personal level just saying, hey, how are you doing? How are you hanging in there? She's been under enormous pressure. I think that she has carried herself - first of all, she's done her job throughout this process. She comes, you know, fully prepared to her FOMC meetings. She fully contributes with very rich and robust analysis backing up her views. And so I think I've just shared with her my admiration for the way that she's continued to do her job, given the pressure that she's been under, and that's really been the extent of our conversations.
DETROW: For people who don't follow this as closely, why, to you is an independent Fed so important? And why was this such a dangerous case?
KASHKARI: Well, what history has shown, not just in America but around the world, is that politicians of both sides of the aisle, both leanings, would prefer when they're in power to have lower interest rates to boost the economy, to make their constituents happy and boost their political chances. And when central banks have acted in terms of - in favor of politics over analysis and data, it ends up leading to much worse economic outcomes for the public over the long term. It leads to higher inflation. It leads to more volatility. It can even lead to financial crises. And so every single advanced economy in the world has adopted the view that monetary policy should be kept independent of short-term political considerations, and the Supreme Court did its part today to affirm that view.
DETROW: I mean, given how central interest rates were to all of this and the pressure that President Trump was putting on the Fed to lower them, I am curious. You've made comments in the past. You know, given what is happening with inflation, how likely is Trump to get his way as the rest of the year plays out?
KASHKARI: Well, I mean, we're all going to focus on the data. I certainly am, and I know my colleagues on the Federal Open Market Committee are. And inflation is still too high. And if we look at most of the readings of inflation, it's not moving down. It's moving sideways or maybe even moving up. It's not just related to oil. I mean, oil prices are a big driver of inflation, but so is what we call services inflation, which is not directly related to oil or energy prices. And so there are a lot of factors that have been pushing inflation higher. Inflation has been too high for five years. The American people really don't like high inflation. And we have a job to do, and that's get inflation back down to our 2% target. And I know that we are committed to doing so.
DETROW: I wanted to ask about the other case that we heard about. I'm curious - have you had a chance to think about this economically? Do you have any concerns about what this ruling about broader regulatory agencies could mean for the economy if suddenly these agencies that have a big say over commerce can suddenly be a lot more at the whim of a current administration?
KASHKARI: You know, I think it'll lead to more volatility in the economy. We hear about this in different sectors where there are regulatory policies that Congress passes for, let's say, a two-year period or a four-year period, and then it's due to renewal, and there's uncertainty about whether Congress would renew it. And many businesses say, hey, we can't make long-term investment decisions if we don't know that the regulatory apparatus is going to be consistent for the life of our investment, say, a 10-year investment. If we end up in a world where every four years or every eight years, the pendulum swings dramatically across different sectors of the economy, I think it would lead to more volatility, and that could be more challenging environment for businesses to make long-term investment decisions.
DETROW: Neel Kashkari is president of the Federal Reserve Bank of Minneapolis. Thank you so much for talking to us.
KASHKARI: Thank you for having me.
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