Minneapolis Fed President Kashkari spoke in Buenos Aires and highlighted the following:
- The economy is nearing 2% inflation.
- It’s unclear how tight current monetary policy is.
- The job market continues to be robust.
- Recent job data shows the labor market isn’t weakening quickly.
- Modest rate cuts seem appropriate moving forward.
- Monetary policy will depend on data and economic performance.
The Fed recently cut rates by 50 basis points to better align with declining inflation. Despite stronger-than-expected employment data and slightly higher CPI (though PPI was contained), some Fed officials, including Kashkari, believe there’s still a buffer between inflation and the current Fed funds rate.
The futures market indicates an 84% chance of a 25 basis point cut in November, and a 16% chance of no change in policy.