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Minneapolis Federal Reserve President Neel Kashkari said Wednesday that inflation remains too high, even after the latest price data arrived below economists’ expectations. The latest report did not materially change his assessment of persistent price growth.

Kashkari made the comments during an exclusive interview with CNBC’s Steve Liesman at a Council on Foreign Relations event in New York. His remarks followed the morning release of fresh inflation figures closely watched by the Federal Reserve.

The August personal consumption expenditures price index is known as the Fed’s preferred inflation gauge. Its core reading, which excludes volatile food and energy prices, rose at a 3% annual rate, coming in below economists’ forecast.

“Inflation is still too high,” Kashkari told Liesman. He emphasized that one cooler reading did not erase the longer period of elevated prices confronting consumers and policymakers.

“There are many different measures of inflation, but it’s running at around a 3% rate,” Kashkari said. “It’s been elevated now for more than five years. I didn’t think the inflation data today really changed that story for me very much.”

Other economic reports released Wednesday painted a picture of continued strength. Kashkari said data covering consumer spending and gross domestic product showed that the economy is “resilient.”

Kashkari also recalled a roundtable discussion from several years ago in which a labor union leader described inflation as “worse” than a recession for union members. He said that exchange has shaped how he considers the choices between price stability and employment.

The Fed this month issued its first interest rate hike in three years as it sought to restrain price growth running above its preferred level. The central bank also indicated that another increase could be coming.

Kashkari described the labor market as “pretty good” but not “great.” Earlier Wednesday, management services firm ADP reported that private payrolls grew by more than economists had expected during September.

The economy’s ability to withstand shocks in recent years has prompted Kashkari to increase his estimate of the neutral funds rate to 3.25%. That rate reflects his assessment of where monetary policy would neither stimulate nor restrain economic activity.

Kashkari said the neutral rate is probably temporarily elevated because the artificial intelligence boom is driving demand for investment capital. Companies are committing money and resources to an AI buildout whose eventual economic impact remains uncertain.

If that buildout succeeds, Kashkari said artificial intelligence could increase productivity across the U.S. economy. At the same time, he expressed concern that corporate investment may fail to produce the intended results or may take longer than expected to deliver them.

“The fruits have not yet borne out,” Kashkari said. “If this ends up being massive investment that is not nearly as productivity enhancing as we assume, then this will have been malinvestment, and then there could be big economic consequences for the economy writ large.”

Kashkari said the AI industry may have to become more “efficient” in its use of money and resources. The former Treasury Department official said that lesson could become necessary during a period of tighter monetary policy.

He acknowledged that Fed interest rate increases may not slow hyperscalers by “much.” However, Kashkari, who previously worked at Goldman Sachs and Pimco, said changes in borrowing costs could still have a helpful effect on other parts of the economy.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.