Fed’s Kashkari wants to see ‘several more months’ of positive inflation data before rate cut
LONDON — The Federal Reserve should wait for significant progress on inflation before cutting interest rates, Minneapolis Federal Reserve President Neel Kashkari told CNBC on Tuesday.
Asked what conditions would be necessary for the Fed to cut rates once or twice this year, Kashkari said: “Many more months of positive inflation data, I think, to give me confidence that it’s appropriate to go back”.
He said the central bank could even raise rates if inflation failed to fall further. “I don’t think we should rule anything out at this point,” Kashkari added.
US inflation rose a slightly less-than-expected 0.3% in April, providing some relief to policymakers. It nevertheless remains up 3.4% over the year.
Kashkari said he was confident the Fed would ultimately reach its 2% inflation target, but added: “I don’t see the need to rush and cut rates, I think we should take our time and well do things.”
He noted that the central bank could consider raising its target rate in the future, but said it was not appropriate to “move the targets” at this stage.
This comes after Kashkari said earlier this month that the Fed may need to keep interest rates steady for “an extended period of time” – perhaps the entire year – in order to achieve its goal.
Divergences emerged between major central banks over the outlook for interest rates, with the Fed – usually the first to act – becoming more hawkish amid persistently high inflation.
The European Central Bank is now expected to cut rates before the Fed, with two key ECB figures backing a June rate cut on Monday.
The Bank of England is also expected to cut rates this summer.
This is a developing story and will be updated shortly.
News Source : www.cnbc.com
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