May 22 (Reuters) - Minneapolis Federal Reserve President Neel Kashkari said on Monday it was a "close call" whether he would vote to raise interest rates or pause the central bank's tightening cycle when it meets next month.
Speaking on CNBC, Kashkari also said services inflation remained entrenched and that "it may be that we have to go north of 6%" to get it back to the Fed's 2% target.
"I think right now, it's a close call either way, versus raising another time in June or skipping," Kashkari said, adding: "Important to me is not signaling that we're done... if we skip in June."
The Fed raised its benchmark overnight rate for a 10th straight meeting this month, lifting it to a range of 5% to 5.25%.
Officials in their accompanying policy statement opened the door to pausing hikes while they assess how inflation is responding and to see to what extent the recent banking system stress might add to the tightening of monetary conditions engineered by the Fed.
Kashkari, a 2023 voting member of the rate-setting Federal Open Market Committee who has emerged in the last year as one of the most hawkish policymakers, said he is seeing little evidence yet in his district that the banking system ructions triggered by the collapse in March of Silicon Valley Bank had had demonstrable impact on the availability of credit.
In an essay published on Monday, Kashkari reiterated a call for regulators to impose more stringent capital requirements on U.S. banks.
If SVB and the other banks that recently collapsed had had "significantly more equity capital, their depositors would have been reassured because the banks could have absorbed their market-to-market losses," Kashkari wrote.
At their June 13-14 meeting, Fed officials will also provide fresh forecasts for where they see rates heading this year and through 2025. In March, the median expectation for rates this year was 5.1%, which they reached this month.
Kashkari told CNBC that his projection in March was already above that level. Six other policymakers also had above-median rate forecasts for 2023, and Kashkari said he could not rule out that the policy rate may need to go above 6% if inflation, currently more than twice the Fed's target, did not show signs of returning to 2%.
"I think we're letting inflation guide us," he said. "It may be that we have to go north of 6%."
Reporting By Dan Burns; Editing by Toby Chopra
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