Fed’s Kashkari: The Fed might cut rates twice this year
|The President of the Federal Reserve Bank of Minneapolis, Neel Kashkari, noted that he was sticking to his view that cooling inflation would allow the Fed to cut its policy rate twice that year, beginning in September.
Key Quotes
- Continues to expect two rate cuts in 2025, with the possible first cut in September.
- If the Fed cuts in Sept and the tariff effect shows up later, it could pause rate cuts.
- Official data so far reveals only modest impact of tariffs on prices, activity, and the labour market.
- Inflation boost is likely coming, but actual inflation indicates renewed progress towards the 2% target.
- More time is needed to determine if the effects of the trade war are delayed or if it will be smaller than thought.
- Emphasis must be on actual inflation and real economic data without committing to an easing policy path in case tariff effects are delayed.
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