Fed's Kashkari: "Even Two Rate Cuts This Year Are Difficult"

Neel Kashkari, President of the Minneapolis Federal Reserve Bank, stated that it may be difficult to cut the base interest rate twice this year.

[Image source=Reuters Yonhap News]

In an interview with the Wall Street Journal (WSJ) released on the 6th (local time), President Kashkari said, "As of last December, I thought two rate cuts this year would be appropriate," adding, "Now it is difficult to expect more rate cuts."

He explained, "Basically, my position is the same as in December, or there may be one less rate cut," and added, "I have not made a decision yet." He further noted, "It will be decided based on inflation indicators."

President Kashkari has been considered a leading dove (favoring monetary easing) within the Fed, but in recent years he has shown many hawkish (favoring monetary tightening) tendencies. He does not have voting rights in this year's Federal Open Market Committee (FOMC).

Additionally, President Kashkari explained, "The Fed's baseline case is to no longer raise rates," and said, "If inflation proves to be more persistent than we expect, the Fed's first action will be to keep rates at the current level for a longer period." However, he also stated, "If inflation surges again, rate hikes could be justified." Regarding the labor market, he assessed that "the balance is improving."

Earlier, the Fed suggested the possibility of a 0.75 percentage point rate cut this year through the dot plot at the December FOMC meeting last year. The new dot plot containing the Fed's rate outlook is expected to be released after the March FOMC meeting scheduled for the 19th-20th.

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