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The Federal Reserve best approach raising interest rates carefully, or else, suggests outspoken Minneapolis Fed chief Neel Kashkari. 

Here's what Kashkari told TheStreet when asked if the Fed risks moving too fast to hike rates:

"I think the risk is that we do it too fast unnecessarily and we shorten the economic recovery. One thing I look at is the shape of the yield curve. And the yield curve has been flattening quite a bit. The inverted yield curve is the single best predictor we have of recessions. To me, it's an indicator of the Fed over-tightening.

So if we keep raising rates despite the fact the yield curve is flattening, if the long end of the curve does not move up, if inflation does not emerge and we just keep raising rates we could end the expansion by being too aggressive on monetary policy. So it is something I am worried about, and I pay close attention to."

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If the Fed does stay the course on rate increases, Kashkari worries that a recession in 2019 is possible:

"We all say we are data dependent at the Federal Reserve. If we are in fact not data dependent and we are just committed to raising rates and the data doesn't support it, then certainly that [recession] is possible. There are other risks as well. There could be trade outcomes if we were to go into a full-fledged trade war with China and other geopolitical risks. There are other risks out there, and some are very hard to predict.

But one thing we should understand is the risk of the Fed over doing it, and that's why we need to remain data dependent."

The Fed is widely expected to increase rates at its next policy meeting on June 12-13. But markets are betting on a more hawkish Fed for the balance of the year, too. Fed fund futures see an 80% chance of a rate hike at the July 31-August 1 policy meeting, and near 50% chances of increases at the last three meetings of 2018.