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Fed’s Kashkari wants to see ‘many more months’ of good inflation data before cutting rates

Minneapolis Federal Reserve Governor Neel Kashkari said Tuesday that central bank policymakers should wait to see a significant improvement in inflation before starting to cut interest rates.

In an interview with CNBC, when asked what conditions would be necessary for the Fed to cut rates this year, Kashkari said, “I think we need to see many more months of positive inflation data before we’re confident that a cut would be appropriate.”

He also suggested the central bank could raise interest rates if inflation does not fall further, saying: “I don’t think we should rule out any possibility at this point.”

Kashkari won’t have a voting role on the 12-member Federal Open Market Committee this year but attends meetings, participates in discussions and provides his perspective on proceedings. He will rotate back in as a voting member in 2026.

Federal Reserve meeting minutes show “willingness” to raise interest rates again

Neel Kashkari Federal Reserve Bank of Minneapolis

Federal Reserve Bank of Minneapolis President Neel Kashkari visits FOX Business’ “Wall Street with Maria Bartiromo” on October 11, 2019 in New York City. (Photo by Roy Rochlin/Getty Images/Getty Images)

The authorities voted At its last meeting in May, the Fed decided to keep interest rates on hold at a range of 5.25 percent to 5.5 percent, the highest level since 2001. In a statement after the meeting, policymakers left the door open to a rate cut this year but stressed they needed “further confidence” that inflation was falling before easing policy.

Since then, there has been some evidence that inflation is starting to ease again, albeit slowly: The April Consumer Price Index showed inflation fell slightly to 3.4% from 3.5% the previous month, easing investor concerns that prices may be rising again.

Inflation rises to 3.4% in April as prices remain high

Federal Reserve

The Marriner S. Eccles Federal Reserve Bank Building in Washington, DC, July 6, 2022. (Photographer: Al Drago/Bloomberg via Getty Images/Getty Images)

But minutes of the meeting released last week indicated officials were prepared to keep rates high for a longer period and to raise them again if necessary, following a series of disappointing inflation readings in the first three months of the year.

“Participants noted the disappointing first-quarter inflation reading and indications of strong economic momentum, and assessed that it will take longer than previously expected to gain confidence that inflation is moving sustainably toward 2 percent,” the minutes said.

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Kashkari said Tuesday he remains confident the Fed will ultimately achieve its 2 percent inflation target and will continue to wait and see until that happens.

“I don’t think there’s any need to rush into lowering interest rates,” he said. “We should take our time and take appropriate action.”

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