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.
“In the end, our job is the biggest employment and stable prices. If we see very good data on the inflation front while the labour market remains strong, it will ease me further. I think we’ll move towards it,” Kashkari said in “Squawk Box.” “If you really see inflation coming down quickly, you don’t know why you have to keep the fees where they are.”
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 going to reduce 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 the negotiations that are happening?” he said. “Obviously tariffs are difficult because it’s not just what we do 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 say we need to wait and see. We don’t know enough information about what’s being announced,” Kashkari said. “The good news is… the economy is in a good place. So we’re in a very good place to sit here until we get more information about the tariff front, the immigration front and the taxes. . Front and so on. All of these things will be important.”
