Federal Reserve of Minneapolis (FED) president Neel Kashkari believes that further interest rate cuts will take place in 2024. In a recent essay, Kashkari expressed his support for the 50-basis point cut that was implemented last week and also indicated his backing for future moves by the FED. While he did not offer definitive predictions, his statements suggest that the FED is preparing for more rate cuts.
Kashkari expects the upcoming cuts to be smaller in magnitude compared to the recent reduction. He stated, “I was comfortable taking a larger first step, and then as we go forward, I expect, on balance, we will probably take smaller steps unless the data changes materially.” This hints that the FED may reduce rates by 25 basis points, unless there is a significant deterioration in the job market.
Economists, such as Jeffrey Roach from LPL Financial, believe that Kashkari’s statements are meant to prepare investors for a consistent pattern of rate cuts over the next few meetings. The FED has two more meetings scheduled this year, one in November and another in December. Bloomberg reported that Kashkari favors an additional 50 basis points worth of cuts by the end of the year, although he does not have voting power within the Federal Open Markets Committee (FOMC).
The decision to implement the rate cut in September was somewhat unexpected, as it was larger than the usual quarter-point reduction. Federal Reserve Chair Jerome Powell justified the size of the cut by citing declines in the rate of inflation and a slight increase in the unemployment rate.
Inflation has been consistently at or below 3% since June, a positive indication that it is moving closer to the Fed’s target rate of 2%. However, the labor market has been showing signs of softening, with the unemployment rate hovering above 4% for the past four months.
Kashkari believes that the risks have shifted towards a weakening labor market rather than higher inflation, which justifies the need for further rate cuts. He stated, “The balance of risks has shifted away from higher inflation and toward the risk of a further weakening of the labor market, warranting a lower federal funds rate.”
Despite the mixed economic signals, Kashkari remains optimistic about the underlying strength of the U.S. economy. He highlighted robust GDP growth and consumer spending as indicators that a major slowdown is not imminent. The specifics of future rate cuts will depend on the interplay of these factors, but Kashkari emphasizes that the need for rate cuts is justified regardless.
In summary, Kashkari’s predictions of further interest rate cuts in 2024 indicate the FED’s stance on maintaining accommodative monetary policy. As the economic landscape evolves, policymakers will closely monitor indicators such as inflation, the labor market, GDP growth, and consumer spending to determine the optimal course of action.
Spørsmål og svar (FAQ) basert på hovedtemaene og informasjonen presentert i artikkelen:
1. Hva tror Neel Kashkari, presidenten for Federal Reserve of Minneapolis (FED), om rentekuttene i 2024?
– Kashkari tror at det vil bli gjennomført ytterligere rentekutt i 2024.
2. Hva slags reduksjon støttet Kashkari og hva signaliserer han om fremtidige kutt?
– Kashkari støttet en reduksjon på 50 basispunkter og antydet at FED er forberedt på flere rentekutt i fremtiden.
3. Er Kashkari forventet at de kommende kuttene vil være større eller mindre enn den siste reduksjonen?
– Kashkari forventer at de kommende kuttene vil være mindre i omfang sammenlignet med den siste reduksjonen.
4. Hva kan føre til større rentekutt?
– Med mindre det er en betydelig forverring i arbeidsmarkedet, antyder Kashkari at FED kan redusere renten med ytterligere 25 basispunkter.
5. Hva tror økonomer som Jeffrey Roach om Kashkaris uttalelser?
– Økonomer som Jeffrey Roach tror at Kashkaris uttalelser er ment å forberede investorer på en konsekvent serie med rentekutt i de neste møtene.
6. Hvor mange flere møter skal FED ha i år?
– FED har to flere møter planlagt i år, ett i november og ett i desember.
7. Hva er Kashkaris synspunkt på inflasjon og arbeidsmarkedet?
– Kashkari mener at risikoen har skiftet mot et svakere arbeidsmarked i stedet for høyere inflasjon, noe som rettferdiggjør behovet for ytterligere rentekutt.
8. Hvilke indikatorer vil FED følge nøye med på for å bestemme fremtidige rentekutt?
– FED vil følge inflasjonen, arbeidsmarkedet, BNP-vekst og forbrukerutgifter tett for å bestemme den optimale handlingsplanen.
9. Hva er Kashkaris synspunkt på styrken til den amerikanske økonomien?
– Til tross for blandete økonomiske signaler, er Kashkari optimistisk angående den underliggende styrken til den amerikanske økonomien, med robust BNP-vekst og forbrukerutgifter som positive indikatorer.
Relaterte lenker:
– <a href="https://www.minneapolisfed.org/Federal Reserve of Minneapolis hjemmeside