Key points:
Supported rate cut this weekRisk of sharp increase in unemployment warrants some Fed actionNeutral rate has likely risen to 3.1%Fed policy has not been as tight as previously thoughtCan always cut rates more quickly if labour market weakens more than expectedIf labour market proves resilient or inflation rises, should pause and hold policy rateOpen to raising policy rate if economic conditions warrantHard to see inflation climbing much higher than 3% from tariffs
Kashkari has been leaning hawkish for a long time and he’s not deviating from his usual stance here. He’s also been one of the very few open for rate hikes if needed but that will likely take inflation to start rising steadily above 3%.
Kashkari is not a voter this year but will be next year. This article was written by Giuseppe Dellamotta at investinglive.com.