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Federal Reserve Bank of Minneapolis President Neel Kashkari indicated on Friday that he could support further rate cuts if inflation continues to decline and the labor market remains resilient. Speaking with CNBC, Kashkari emphasized that while inflation is cooling, the Fed remains cautious about policy adjustments.
Key Insights from Kashkari’s Remarks
- The rise in 10-year yields despite Fed rate cuts is likely driven by real rates and fiscal deficits.
- The labor market remains strong, with unemployment at 4% signaling economic stability.
- Businesses remain optimistic, and the broader economy is in good shape.
- The Fed is in a “good place” to wait for more data, particularly regarding inflation and policy changes under the administration.
- Housing inflation is expected to play a significant role in further cooling price pressures.
Market Implications
Kashkari’s comments reinforce the Fed’s cautious stance on rate cuts, suggesting that the central bank will move gradually and data-dependently. Investors will closely watch inflation trends and labor market conditions to gauge the timing of potential policy shifts.
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