Minneapolis Federal Reserve Bank President Neal Kashkari stated on Wednesday that the Fed should immediately begin a gradual interest rate hike process, raising the benchmark interest rate slowly and steadily to curb stubborn inflation and avoid the risk of being forced to raise rates aggressively in the future. This statement was not a spontaneous opinion from Kashkari, but rather a public continuation of his dissenting stance at last week's Federal Reserve meeting. At last week's Federal Open Market Committee (FOMC) policy meeting, the Fed ultimately voted to maintain the benchmark interest rate range unchanged. Kashkari was one of the three members who voted against the decision and a key supporter of the proposed rate hike. Details of the vote: First dissenting vote this year The voting results at last week's FOMC meeting showed a clear divergence: 3 votes against and 9 votes in favor of maintaining the interest rate unchanged. Kashkari and two other dissenting members unanimously advocated for a 25 basis point rate hike, while the majority of members chose to maintain the status quo, locking the federal funds rate in the 3.5%-3.75% range. It is noteworthy that this is the first dissenting vote at a policy meeting since Kevin Warsh became Fed Chairman, signifying a break in the Fed's unified policy rhythm and the entry of monetary policy decision-making into a phase of divergent bargaining. Regarding the dissenting vote, Kashkari specifically revealed that Fed Chairman Warsh did not pressure him. Warsh, who has traditionally favored a loose, low-interest-rate policy, told Kashkari this time, "Make the judgment you believe is best for the economy," fully respecting the independent decision-making positions of the committee members. This also reflects the current uncertainty surrounding the Fed's policy direction. Kashkari's core logic for raising interest rates: Current monetary policy tightening is insufficient. In a live interview at the Aspen Thought Festival, Kashkari elaborated on his reasoning for raising interest rates. His core judgment is that current monetary policy has not effectively tightened and cannot suppress inflationary pressures. This is mainly based on three fundamental economic factors: First, corporate profits have rebounded significantly. US companies are generally performing strongly, with profit data rising sharply, indicating ample economic activity and no signs of cooling. Second, consumer spending is resilient, with the consumer market continuing to support the economy. Consumer demand has not contracted significantly, and aggregate demand remains strong. Third, the labor market remains robust, with the overall employment market stable and without significant easing. The unemployment rate remains low, and there are no signs of an economic recession. Based on these factors, Kashkari clearly stated that there is currently no evidence to prove that the Fed's current monetary policy has a significant tightening effect. If interest rates remain unchanged, high inflation will gradually solidify, and subsequent correction will only be possible through large-scale, aggressive interest rate hikes, which will have a greater impact on the economy. Therefore, he advocates prioritizing small, gradual interest rate hikes, possibly starting as early as September, with adjustments made flexibly based on subsequent economic data to hedge against inflation risks in advance and prevent deeply entrenched inflation expectations. Current Inflation and Economic Fundamentals: Deep-seated Hidden Dangers Beneath a Brief Improvement Since the beginning of this year, the FOMC has generally chosen to remain on hold and maintain interest rates unchanged. The core reason is that the US economy is showing a phase of improvement with a stabilizing labor market and a slight decline in inflation. Committee members need time to observe the data and weigh the pace of policy. In the short term, US inflation showed a slight improvement in June. Affected by the temporary easing of geopolitical conflicts in the Middle East and the decline in international oil prices, inflationary pressures on the energy sector were released in the short term, and inflation data temporarily cooled. However, Kashkari remains highly vigilant about the inflation trend, believing that the short-term improvement is not sustainable. Currently, US inflation remains significantly higher than the Federal Reserve's core policy target of 2%, and continues to face multiple supply-side shocks. Various supply chain disruptions and commodity price fluctuations continue to put downward pressure on prices, highlighting the persistent nature of inflation and indicating that potential risks have not been eliminated. Meanwhile, the US labor market has shown greater resilience than expected, with stable employment data and persistent job vacancies, indicating that the economic fundamentals have not weakened. This provides fundamental support for further interest rate hikes, and the extreme risk of a recession following an interest rate hike is unlikely. Internal Fed Disagreements: Two Core Opposing Views Kashkari's remarks have further amplified the policy disagreements within the Federal Reserve. The day before his speech, Philadelphia Fed President Anna Paulson, who also has a voting right on the 2026 FOMC, publicly expressed completely opposite views, creating a stark policy opposition. 1. Kashkari's (Hawkish) View: Current monetary policy is too loose and not tight enough, failing to effectively curb the economy and inflation; a small interest rate hike must be implemented ahead of schedule to proactively control the risk of inflation entrapment and avoid the severe impact of subsequent aggressive interest rate hikes on the economy. He advocates starting a gradual interest rate hike cycle in September. 2. Paulson's (dovish) view: Current interest rates have already had a moderate tightening effect on the economy, gradually suppressing inflation; there is no need to raise interest rates at this stage, and rates should be maintained unchanged, with continued monitoring of subsequent inflation and employment data before making further decisions. She also emphasized that her vote to maintain the current interest rate was not a dilemma, but a clear optimal judgment. The core contradiction in the disagreement between bulls and bears lies in the assessment of the current tightening力度 of monetary policy and the prediction of inflation risks, which is also the core point of contention in the Fed's policy decisions going forward.