(Reuters) -The Federal Reserve will eventually need to increase U.S. interest rate by a certain amount, depending on the speed at which supply bottlenecks are cleared out, Neel Kazhkari of Minneapolis Fed stated on Tuesday.

The Fed raised its policy interest rate three quarters of an inch to a range of 0.75-1% in March. Kashkari stated that the U.S. central banks has said it would raise the rate to at most a neutral level, usually around 2.5%, by the end.

“The question I have right now is to ask myself and to my economists, that is to say, are we just going to need to keep our word? Or will we have have to go further?” Kashkari spoke to the Sault Ste. Michigan’s Marie Chamber of Commerce. “And I don’t know the solution to that.”

To cool inflation, higher borrowing costs will be used to reduce demand.

Supply constraints in both the labour market and the production of goods are driving rising prices. This is not something the Fed can fix.

Kashkari explained that private firms are trying to make supply chains work again. However, the recent COVID-19 lockdowns in China and Ukraine have retangled supply chains just as they had been beginning to improve.

Kashkari declared that she and her colleagues will do all they can to restore the balance to the economy. What I do not know is how much we will need. If we have some supply-side help, we’ll be able to reduce our workload. However, if there’s no help from the supply side we’ll have to work harder.