Neel Kashkari

Minot State University will host the Minot Area Chamber EDC’s town hall with Federal Reserve Bank of Minneapolis President Neel Kashkari.

The event will be held in Ann Nicole Nelson Hall on the MSU campus on Tuesday, Oct. 10, at 2 p.m. and is free and open to the public.

“It is a terrific and unique privilege hosting the president of a Federal Reserve Bank, and we look forward to holding the town hall event at Minot State,” said Minot State President Steven Shirley. “We are grateful to President Kashkari for making the effort of seeing all the great things happening in and around Minot, and we are especially honored to have him on the MSU campus during his visit.”

Kashkari is a voting member of the Federal Open Market committee, the body of the Federal Reserve System that sets national monetary policy, including interest rates. Kashkari will give brief remarks followed by audience questions moderated by Brenda Foster, CEO of First Western Bank & Trust of Minot, with the larger goal of hearing directly from North Dakotan’s regarding their concerns and questions with the current condition of the state and national economies.

“One hundred eight years ago, when Congress created the Federal Reserve, they wanted all the regions of the country to be involved in the policymaking process. A big part of my and my colleagues’ jobs are to make sure we understand what’s happening in the North Dakota economy.” Kashkari said, “We want to make sure that North Dakota is a part of that deliberative process to pick the right policy for the country as a whole. How’s the ag sector? How’s the energy sector? What are the challenges that small businesses are facing? What are the challenges that workers are facing as the job market is getting softer? All of those questions and comments will make me smarter, and I’m going to take this back to Washington D.C.”

With inflation numbers and consumer prices spiking to historic levels in the aftermath of the COVID-19 pandemic, the Federal Reserve’s policy has involved steady increases to interest rates. Such policies are typically enacted in the hope that it might dash some of the momentum in economy that is heating the coals and fires spurring the inflation. The analysis coming from Kashkari and the regional bank shows a resiliency in the economy that might spell further hikes in the future, but still projects a rosier outcome is more likely.

“The big surprise for us over the past year is we thought the economy would be slowing a lot in response when interest rates increase. It’s actually been remarkably resilient over the GDP growth and consumer spending and the job market. All that suggests is that the economy has a lot of momentum, and we’re trying to slow it down a little bit.” Kashkari said, “If the economy continues to chug along, we’re going to need to do more with our interest rate increases to slow it down.”

This prospect of further rate hikes is weighing heavily on the minds of farmers and rural banks who are projecting diminished farm incomes as fall harvest yields are affected by drought conditions throughout the upper Midwest. Even then, the prescription provided by Kashkari and the ensuing handwringing may not be necessary. In an essay he penned in September, Kashkari predicted that additional rate hikes were only 40% likely as inflation dropped three percentage points this summer, leaving us with the more likely scenario of a “soft landing.”

“I’d say to focus on what are you seeing in local economic activity? Are things slowing down not just in North Dakota but around the country? Are things still growing at a pretty good clip? That would be overwhelming thing that I would look at.” Kashkari said, “Access to credit is critical for farmers, no question. It’s also critical in the oil and gas industry if they want to continue exploring. They need access to capital, and the capital gets more expensive and harder and harder for them to do that.”