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minneapolis federal reserve President Neel Kashkari said on Tuesday the central bank needs to keep interest rates unchanged for the “long term”, which could last until the end of the year.
Kashkari spoke at the Milken Institute conference, outlining what needs to be seen at the conference. inflation data before he supported rate cuts.
“We will need to see several positive inflation indicators that suggest the deflation process is on track,” Kashkari said.
His remarks came as the decline in inflation has largely stalled in recent months, with the most recent reading of year-on-year inflation at 2.7%. That level is well above the Fed’s target rate of 2%, leaving policymakers at a loss with rising inflation, but clearly not enough to warrant further rate hikes.
Fed chief says next rate cut is likely, but timing is uncertain
Minneapolis Fed President Kashkari said the Fed needs more evidence of falling inflation before cutting rates. (Victor J. Blue/Bloomberg via Getty Images/Getty Images)
Mr. Kashkari also said that he would closely monitor future developments. labor market A “significant” change in weakening job creation could also justify a rate cut.
He said in March that he believed the Fed would need to cut rates twice in 2024, but that it could only cut once or not at all, depending on the data, at the central bank’s meeting next month. Ta. Forecasts will be announced by policy makers.
Fed leaves interest rates unchanged as inflation casts doubt on future rate cuts
Federal Reserve Chairman Jerome Powell said further interest rate hikes were unlikely, but that interest rates could continue to rise until inflation subsides. (Samuel Corum/Getty Images/Getty Images)
The Federal Reserve raised the benchmark federal funds rate to 5.25-5.5%, the highest level in 23 years, in order to curb inflation, which reached 9.1% in June 2022, the highest level in 40 years.
Kashkari echoed this sentiment, although recent progress in curbing inflation has slowed, with some data suggesting inflation may be on the verge of accelerating again. Jerome Powell Fed Chairman He indicated that further interest rate hikes were unlikely.
He said the bar for raising rates is “quite high, but not infinite,” and that the ultimate course of action may be to keep rates high until inflation subsides.
The Fed is waiting for inflation to fall further before cutting rates. (Nathan Howard/Bloomberg/Getty Images)
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“There are limits to saying, ‘Okay, we should do more.’ Until we know what impact our monetary policy will have, it will be more than we expect, or more than the public currently expects.” I think it’s much more likely that we’ll be sitting here longer than we are doing,” Kashkari said.
Reuters contributed to this report.
