The Fed has no urgency to cut rates, expert says
Dominari Financial CEO Kyle Wool discusses Federal Reserve policy, stock performance and top IPOs on 'The Claman Countdown.'
Minneapolis Federal Reserve President Neel Kashkari said Tuesday that central bank policymakers should wait for significant progress on inflation before they start to cut interest rates.
Asked during an interview with CNBC what conditions are needed for the Fed to reduce rates this year, Kashkari said: "Many more months of positive inflation data, I think, to give me confidence that it’s appropriate to dial back."
He even suggested the central bank could hike rates if inflation fails to come down further, saying "I don’t think we should rule anything out at this point."
Kashkari is not a voting member of the 12-person Federal Open Market Committee this year, although he still attends meetings, participates in discussions and contributes his perspective to the proceedings. He will rotate in again as a voting member in 2026.
FED MEETING MINUTES SHOW SOME 'WILLINGNESS' TO HIKE RATES AGAIN
Minneapolis Federal Reserve Bank President Neel Kashkari visits "Maria Bartiromo's Wall Street" at Gxstocks on Oct. 11, 2019, in New York City. ((Photo by Roy Rochlin/Getty Images) / Getty Images)
Officials voted at their most recent meeting in May to hold interest rates steady at a range of 5.25% to 5.5%, the highest level since 2001. Although policymakers left the door open to rate cuts later this year in their post-meeting statement, they also stressed the need for "greater confidence" that inflation is coming down before easing policy.
Since then, there has been some evidence that inflation is starting to ease again, albeit slowly. The April consumer price index showed that inflation cooled slightly to 3.4%, down from 3.5% the previous month, alleviating investor concerns that prices were heating up again.
INFLATION INCREASES 3.4% IN APRIL AS PRICES REMAIN ELEVATED
The Marriner S. Eccles Federal Reserve building in Washington, D.C., on July 6, 2022. (Photographer: Al Drago/Bloomberg via Getty Images / Getty Images)
But minutes from the meeting released last week showed that officials are prepared to keep rates elevated for longer after a string of disappointing inflation readings in the first three months of the year – and willing to hike again if needed.
"Participants noted disappointing readings on inflation over the first quarter and indicators pointing to strong economic momentum, and assessed that it would take longer than previously anticipated for them to gain greater confidence that inflation was moving sustainably toward 2 percent," the minutes said.
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Kashkari said Tuesday that he was confident the Fed will ultimately reach its 2% inflation goal and is willing to remain in wait-and-see mode until that happens.
"I’m not seeing the need to hurry and do rate cuts," he said. "I think we should take our time and get it right."
