Fed’s Kashkari says it’s ‘reasonable’ to predict a December rate cut

Fed’s Kashkari says it’s ‘reasonable’ to predict a December rate cut


Federal Reserve Bank of Minneapolis President Neel Kashkari sits in the lobby of the Jackson Lake Lodge in Jackson Hole, where the Kansas City Fed holds its annual economic symposium, in Wyoming, August 24, 2023.

Ann Saphir | Reuters

Minneapolis Federal Reserve President Neel Kashkari on Sunday said it’s a “reasonable prediction” that the U.S. central bank will cut interest rates once this year, waiting until December to do it.

“We need to see more evidence to convince us that inflation is well on our way back down to 2%,” Kashkari said in an interview with CBS’ “Face the Nation” program.

The Fed last week held its benchmark policy rate in the 5.25%-5.50% range, where it has been since last July, to keep continued pressure on the economy so as to cool inflation. It also published projections that showed the median forecast from all 19 U.S. central bankers was for a single interest rate cut this year.

“We’re in a very good position right now to take our time, get more inflation data, get more data on the economy, on the labor market, before we have to make any decisions,” Kashkari said. “We’re in a strong position, but if you just said there’s going to be one cut, which is what the median indicated, that would likely be toward the end of the year.”

Kashkari, who has been more cautious about the possibility of easing monetary policy than many of his colleagues, did not say how many rate cuts he personally expects.

He said he has been surprised by how well the U.S. job market has performed even as the Fed raised borrowing costs aggressively in 2022 and 2023, but that he expects more cooling ahead.

“I hope it’s modest cooling, and then we can get back down to more of a balanced economy,” he said.

Inflation by the Fed’s targeted measure, the year-over-year change in the personal consumption expenditures price index, registered 2.7% in April. The Fed has a 2% target.

The unemployment rate in May ticked up to 4%, the highest since just before the Fed launched its rate hiking campaign in March 2022 but still below what most of its policymakers see as sustainable.

Asked about the barrier high borrowing costs pose for people trying to buy a home, Kashkari said the best thing the Fed can do for the housing market is to bring inflation back down to target.

“If we simply cut interest rates to try to support home ownership right now, that would probably push up the price of houses, and it actually wouldn’t lead to any better affordability,” he said.

“The best thing we can do is do our job – get inflation back down to our target – and then, hopefully, the supply side of the economy can step in to build the homes that Americans need.”



Source

Trump administration is convinced massive Alaska energy project will find investors despite steep cost
World

Trump administration is convinced massive Alaska energy project will find investors despite steep cost

The Trump administration is confident that a massive liquified natural gas project in Alaska will find investors despite its enormous cost. President Donald Trump has pushed Alaska LNG as a national priority since taking office. Alaska has already spent years trying to build an 800-mile pipeline from the North Slope above the Arctic Circle south […]

Read More
In China, ‘The Great American’ burger is now made with Australian beef
World

In China, ‘The Great American’ burger is now made with Australian beef

At his restaurant in Beijing, Geng Xiaoyun used to offer a special dish of salt-baked chicken feet — or “phoenix talons” as they are called in China — imported from America. With prices climbing 30% from March due to tariffs, the owner of Kunyuan restaurant had to pull the Chinese delicacy from the menu. “American […]

Read More
Look to this strategy for tax-advantaged returns and downside mitigation, UBS says
World

Look to this strategy for tax-advantaged returns and downside mitigation, UBS says

With the S & P 500 up marginally in 2025 and bonds seeing sharp price swings, structured notes could give investors a combination of returns and downside protection – if used carefully. Structured notes are hybrid assets: They combine a debt instrument with derivatives, and they’re tied to the performance of another asset, like a […]

Read More