Fed’s Kashkari Says ‘Further Modest’ Cuts Apt in Coming Quarters
Minneapolis Federal Reserve President Neel Kashkari said it appears likely that “further modest reductions” in the central bank’s benchmark interest rate will be appropriate in the coming quarters.
“Ultimately, the path ahead for policy will be driven by the actual economic, inflation and labor market data,” Kashkari said Monday in Buenos Aires at a conference held by the Central Bank of Argentina.
A measure of underlying inflation in September came in hotter than expected, while the most recent snapshot of the US labor market showed a drop in unemployment amid solid hiring. Such data has caused investors to pull back bets the Fed will again cut its benchmark interest-rate by an outsize half-a-percentage-point at its upcoming meeting in November, as policymakers did in September.
While Kashkari described the Fed’s current policy stance as restrictive, he said the extent to which it’s restrictive is “unclear.”
Kashkari said the labor market remains strong and that the most recent jobs report “is encouraging that a rapid labor weakening does not appear to be imminent.” He added that inflation had “come down dramatically from its peak but remains somewhat above our target.”
Kashkari said previously that he was comfortable with the Fed’s September cut and that a quarter-point reduction at each of the Fed’s two remaining meetings this year is a “reasonable starting point.” Fed policymakers projected the central bank would cut rates by a total of another half point during the remainder of 2024, according to the median estimate released last month.
Source : Bloomberg
