Minneapolis Federal Reserve President Neil Kashkari said Friday that he expects interest rates will fall this year if economic data continues to move in the same direction.
In an interview with CNBC, central bank officials expressed confidence that inflation will continue to fall to the Federal Reserve 2% target, while Friday’s non-farm salary report showed that the labor market continues to look strong. I did.
“Ultimately, our job is the biggest employment and stable prices. Looking at the very good data in terms of inflation while the labour market remains strong, it would help me further mitigation. I think we’ll move towards it,” Kashkari said in “Squawk Box.” “If you really see inflation coming down quickly, I don’t know why we have to keep up with why they were.”
Headline inflation in December was run at an annual rate of 2.6%, according to the Fed’s preferred personal consumption expenditure price index. Excluding food and energy, core inflation was a little higher, at 2.8%.
This is well above the central bank’s 2% target, but Kashkari said she expects housing-related data, particularly on rent, to be easier throughout the year, and ultimately returns prices to target. I did. Kashkari is not a voter on the rate setting federal open market committee this year, but will vote in 2026.
“We’re reducing inflation to 2%. We’re committed to it,” he said.
However, Kashkari colleagues have recently expressed some concern about what fiscal policy can do about the image of inflation. President Donald Trump has pushed aggressive tariffs on the US’s biggest trading partners, and some economists fear that triggering a trade war could rekindle inflation .
“We need to see what that uncertainty looks like. What is the scope of negotiations being made?” he said. “Obviously tariffs are difficult because that’s not what we’re doing in America, but back and forth with the reactions of other countries.”
The market is primarily expecting the Fed to be on hold until at least June. At the meeting in late January, the Fed voted to stabilize the benchmark borrowing rate after a full 2024 cut.
“My colleague and I basically said we need to wait and see. We don’t have enough information about what will be announced,” Kashkari said. “The good news… the economy is in a good place, so we’re a very good place to sit here until we get more information, including the customs front, the immigration front, the tax front, etc. I’m in. They all become important.”