Fed’s Kashkari: Two rate cuts this year still seem appropriate.
Neel Kashkari, the President of the Minneapolis Fed, suggests that there could be two rate cuts this year due to the current slowdown in the US economy.
Key Quotes:
The economy is slowing.
Still not clear what impact tariffs will have on inflation.
It may still be appropriate in the near term to begin adjusting the policy rate.
The Fed needs to respond to the slowing economy.
Will not know the answer to inflation for a while; meanwhile, data on slowing is clear.
Two rate cuts this year still seem appropriate.
If inflation does rise because of tariffs, the Fed could pause or even hike.
The unemployment number is very important, but the Fed knows revisions are possible.
Wage growth is declining, which suggests the labour market is cooling.
Will not comment on President’s personnel choices, but do not doubt the BLS data.
Ultimately you cannot fake economic reality.
People will feel the economy; they cannot be convinced jobs or inflation data are different than what they are.
Source: FXstreet
