Minneapolis Fed President Kashkari spoke in Buenos Aires and shared the following points:
- The economy is nearing a return to 2% inflation.
- It’s not clear how restrictive monetary policy currently is.
- The job market is still strong.
- Recent job data shows the labor market is not weakening quickly.
- Further modest rate cuts seem appropriate.
- Future monetary policy will depend on data and economic performance.
The Fed recently made a 50 basis point cut, marking a “recalibration” of rates in response to declining inflation. Despite stronger-than-expected employment data and a slight rise in CPI, some officials still believe there’s a buffer between inflation and the current restrictive Fed funds rate.
The futures market shows an 84% chance of a 25 basis point cut in November, with a 16% chance of no policy change.