On Monday’s broadcast of CNBC’s “Squawk Box,” co-host and CNBC Senior Economics Reporter Steve Liesman stated that the Federal Reserve can’t bring down inflation all on its own and needs help from fiscal policy, and “There’s been no help at all” on the fiscal side in combatting inflation.
While speaking with Minneapolis Fed President Neel Kashkari, Liesman said, “It always struck me that, in order to bring down inflation, you have to have the monetary authority doing the right thing and the fiscal authority doing the right thing. There’s been no help at all from the fiscal authority. Why don’t you guys make more of that, that you can’t fight inflation on your own, just as certainly as you couldn’t fight the pandemic on your own?”
Kashkari responded, “Well, first of all, we do try to stay out of the specifics of fiscal policy. We do say, very clearly, that whatever fiscal policymakers do will be an input into our forecast…that we have to adjust in response to that. And many of the challenges we’ve been seeing, whether it’s the war in Ukraine, that’s been a big contributor, the fiscal authorities are doing what they can to support Ukraine and try to win that war. Supply chains [are] another factor. COVID is another factor. There have been a lot of dynamics that have led to this high inflation. And I do think, in some dimensions, the fiscal authorities are doing what they can to — COVID — knock on wood — is mostly behind us at this point. That helps a lot.”
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