Federal Reserve Bank of Minneapolis President Neel Kashkari has indicated that a slowing US economy could soon warrant an interest rate cut. In a recent interview with CNBC, Kashkari noted, “The economy is slowing,” suggesting that “in the near term it may become appropriate to start adjusting the federal funds rate,” referring to the central bank’s benchmark rate. These comments signal a potential shift in monetary policy as economic indicators weaken.
Kashkari also highlighted the uncertainty surrounding tariffs and their potential impact on inflation. The lingering question of how tariffs will affect the economy is a key consideration for the Federal Reserve. “How long can we wait until the tariff effects become clear? That’s just weighing on me right now,” he stated, underscoring the complexity of the current economic environment.
While Kashkari maintains his expectation for two rate cuts by the end of the year, he acknowledged that the number of cuts could be adjusted depending on the inflationary effects of tariffs. He suggested that acting preemptively, even if it requires adjustments later, might be preferable to remaining on hold. This stance reflects a willingness to adapt monetary policy in response to evolving economic conditions.
Kashkari’s statements offer insight into the Federal Reserve’s current deliberations, as policymakers grapple with balancing economic growth and inflationary pressures amid global trade tensions. His remarks suggest a proactive approach to managing the economy, with a focus on near-term adjustments to the federal funds rate. The Federal Reserve System is the central banking system of the United States. It was created in 1913 by the enactment of the Federal Reserve Act.
