Federal Reserve Bank of Minneapolis President Neel Kashkari has commented on the possibility of a Fed rate cut this year, indicating that he supports two Fed rate cuts this year. The Fed president also touched on the current state of the U.S. economy following the release of the July jobs report.
Kashkari Shows Support For Two Fed Rate Cuts This Year
In a CNBC interview, the Fed president said that two rate cuts this year still seem appropriate. This came as he admitted that the U.S. economy is slowing and that it may be time to begin adjusting the policy rate in the near future.
This suggests that Kashkari has joined a growing list of FOMC members who are leaning towards a September Fed rate cut, with the odds of a cut currently at 90%. He remarked that the U.S. Central Bank needs to respond to the slowing economy.
His remarks follow the release of the U.S. July jobs data, which indicated that the labor market is weakening. This contradicts the Fed’s earlier position that the labor market was strong and that they were in a good position to hold off on an interest rate cut until they understood the impact of the Trump tariffs on inflation.
U.S. President Donald Trump had claimed that the jobs data were manipulated and that the economy isn’t in a bad state. Kashkari stated that he does not doubt the data while refusing to comment on the president’s personnel choices.
On The Labor Market And Trump Tariffs
The Minneapolis Fed president’s statement echoes a similar sentiment to San Francisco Fed president Mary Daly, who remarked that the time is nearing to make a Fed rate cut. Daly had noted that there are signs that the labor market is softening.
Meanwhile, the San Francisco Fed president said that there is yet to be evidence that tariff-driven price increases are significantly impacting inflation. She claimed that if they wait too long to see the impact of the tariffs, they may end up being too late to move.
Kashkari also shared a similar stance, noting that it is still not clear what impact tariffs have on inflation. He added that if inflation does rise because of tariffs, the Fed could move to pause or even hike rates.
This aligns with President Trump’s view that the FOMC should make a Fed rate cut and that if inflation rises, they could move to increase rates. The president has gone as far as pushing for a 300-basis-point rate cut. However, that is unlikely to happen.
To further ensure that a rate cut happens this September, Trump is looking to appoint a Fed Governor who supports lowering rates to replace Adriana Kugler. The president revealed that he would announce his pick by the end of this week.
Boluwatife Adeyemi
Boluwatife Adeyemi is a well-experienced crypto news writer and editor who has covered topics that cut across several niches. His speed and alacrity in covering breaking updates are second to none. He has a knack for simplifying the most technical concepts and making them easy for crypto newbies to understand.
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