Federal reserve president says rate cuts may not come in 2024

Neel Kashkari, president of the Minneapolis Federal Reserve, stated on Tuesday that the central bank will need to maintain interest rates for an “extended period” that might survive the rest of the year.

At a Milken Institute event, Kashkari outlined what he would require from inflation data before he could help interest rate reductions.

According to Kashkari,” I would need to see several beneficial inflation readings that indicate that the disinflation process is proceeding. “

His remarks come as inflation has mostly stagnated in recent months, with year-over-year inflation at 2. 7 % in the most current reading. That amount is well above the Fed’s target rate of 2 %, which leaves policymakers unsure as inflation rises but not to the point where further rate increases are required.

FED Executive SAYS NEXT MOVE LIKELY TO LOWER RATES, BUT TIMING UNCERTAIN

Neel Kashkari, leader of the Minneapolis Fed, said the Fed needs to see more inflation-related data before cutting interest rates. ( Victor J. Blue/Bloomberg via Getty Images / Getty Images )

Kashkari added that he will be keeping an eye on changes in the labor market, which might lead to a “marked” move to sluggish job creation.

When the main institution meets the following month, when new estimates will be released by policymakers, he claimed in March that he anticipated the Fed would need to implement two interest rate reduces in 2024, but that he may have to reduce that down to just one split or perhaps zero, depending on the data.

FED HOLDS RATES STEADY AS INFLATION CASTS DOUBLE ON FUTURE RATE Breaks

Additional interest rate increases are unlikely, according to Federal Reserve Chairman Jerome Powell, but prices may stay elevated until the inflation subsides. ( Samuel Corum/Getty Images / Getty Images )

The Fed raised the standard federal funds rate to a 23- year high of 5. 25 % to 5. 5 % in an effort to tamp down inflation, which peaked at a 40- year high of 9. 1 % in June 2022.

While current efforts to lower inflation have slowed and some data have suggested that it may be on the verge of resuming, Kashkari echoed Fed Chair Jerome Powell‘s warning that further interest rate increases are doubtful.

He argued that while the rate increase is “quite higher, but it’s not infinite,” it might be best to hold rates steady until inflation ebbs.

Before cutting interest rates, the Federal Reserve is awaiting further prices drop. ( Nathan Howard/Bloomberg / Getty Images )

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” There is a restriction when we say,’ OK, we need to complete more. ‘ I believe it is much more likely than the general public’s expectations are right now for us to wait until we can see what effect our economic policies will have, Kashkari said.

Reuters contributed to this statement.