Federal Reserve Bank of Minneapolis Neel Kashkari hints at holding off rate cuts

Federal Reserve Bank of Minneapolis President Neel Kashkari said interest-rate cuts may not be needed this year if progress on inflation stalls, especially if the economy remains robust

Livemint, Written By Shivangini
First Published5 Apr 2024
FILE PHOTO: Neel Kashkari, President and CEO of the Federal Reserve Bank of Minneapolis
FILE PHOTO: Neel Kashkari, President and CEO of the Federal Reserve Bank of Minneapolis(REUTERS)

A key Federal Reserve official signalled on Thursday, April 4, that the central bank might not need to cut interest rates this year if inflation fails to make further progress towards the 2 percent target, as per Bloomberg.

Also Read | RBI policy today: Can RBI precede US Fed in cutting rates? Top experts weigh in

In a virtual event hosted by LinkedIn, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, struck a cautious tone on the prospects of rate cuts in the months ahead. “If we continue to see inflation moving sideways, then that would make me question whether we needed to do those rate cuts at all,” Kashkari remarked, as quoted by Bloomberg.

Also Read | Gold consolidates at all-time high on US Fed rate cut hopes, China data; silver near 3-year high mark

According to the report, the Fed official cited the recent inflation readings for January and February as “a little bit concerning,” underscoring the need to see more evidence that prices are trending downwards before contemplating an easing of monetary policy. 

Also Read | Oil prices decline over caution on US Fed interest rates, Iran sanctions; Brent at $88/bbl

Kashkari, who does not have a vote on the rate-setting Federal Open Market Committee this year, had previously pencilled in two potential rate cuts in 2024, contingent on inflation continuing its descent. “In March, I had jotted down two rate cuts this year if inflation continues to fall back towards our 2% target,” he disclosed.

Emphasising the data-driven approach, Kashkari stressed the importance of letting inflation figures guide the Fed's interest rate decisions going forward.

The Minneapolis Fed chief's remarks echo his stance from a recent event last month, where he posited, “If we have a run rate that's very attractive, people have jobs, businesses are doing well, inflation is coming back down, why do anything?” Bloomberg quoted him as saying.

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