Minneapolis Fed Pres. Neel Kashkari speaking and says:
- Too soon to know if inflation will be sticky from tariffs
- Data is sending some stagflation signals
- Bullish on labor, workers have a very important role in the economy
- Skeptical that a lot of workers are being replaced by AI now
- nature of jobs will change as we use AI tools.
- Far too soon to know the impact of AI on our economy
- if you increase demand for electricity, on average prices will go up across the country.
- If there is massive demand for investment in data centers, that will push up interest rates.
- Not convinced that a few rate cuts will translate to lower mortgage rates.
- Fed drastically lowers rate, would expect the economy to have a burst of high inflation.
- Fed rate setting committee is committed to making decisions based on data, not political considerations
On September 19, Kashkari said he views two more quarter-point rate cuts this year as appropriate, following his support for the most recent cut. He emphasized that the risk of a sharp rise in unemployment warrants preemptive Fed action, while noting that the neutral rate has likely risen to around 3.1%, meaning policy has not been as restrictive as previously assumed.
Kashkari stressed the Fed could accelerate cuts if the labor market weakens faster than expected, but if the labor market remains resilient or inflation picks up, the Fed should pause and hold rates steady. He also kept the door open to raising rates again if conditions demand it, though he added it is hard to see inflation climbing much above 3% from tariff impacts.
This article was written by Greg Michalowski at investinglive.com.