(Bloomberg) -- Federal Reserve Bank of Minneapolis President Neel Kashkari said that the US central bank could potentially pause its interest-rate increases at some point next year if policymakers see clear evidence that core inflation is slowing.  

“My best guess right now is yes, do I think inflation is going to level out over the next few months, the services, the core inflation, and then that would position us some time next year to potentially pause,” Kashkari said Wednesday during a virtual event organized by the Travelers Institute.

However, Kashkari made it clear that he sees no evidence yet to give him “comfort” that core prices, which exclude food and energy costs, are moderating. “That’s what I’m quite concerned about,” he said.

Read more: Kashkari Says Fed Can’t Pause at 4.5% If Inflation Still Rising

Core inflation accelerated to a 40-year high of 6.6% in September from a year ago, according to Labor Department data released last week. The overall consumer price index was up 8.2% from a year earlier, the third straight deceleration. Kashkari did say it’s possible that overall inflation has peaked.

The Fed is rapidly raising interest rates to curb inflation. Investors expect rates to peak near 5% early next year, according to prices of futures contracts. The Fed’s benchmark rate is currently at a target range of 3% to 3.25%. 

Policymakers are seen as likely approve a fourth three-quarter point rate increase when they meet on Nov. 1-2.

The risks of doing too little to squash inflation are greater than the risks associated with the Fed overreacting on inflation, Kashkari said, echoing comments from the minutes of the central bank’s policy meeting last month. “The cost of not tackling inflation, in my mind, that’s an unacceptable cost,” Kashkari said.

©2022 Bloomberg L.P.