Fed’s Kashkari: Rates will be higher for longer

President of the Federal Reserve (Fed) in Minneapolis, Neel Kashkari, made headlines on Tuesday for the second time in a row as he discussed the Fed’s outlook for inflation and interest rates for the remainder of the year.

Kashkari would need to see multiple readings on inflation to be confident enough to cut rates. Kashkari also put down 2 rate cuts in 2024 in March, it’s possible it will stay at 2, or go to 1 or even 0 rate cuts for the June SEP.
The US economy is in a good place.

Key Quotes

If disinflation returns, or we see marked weakening in the job market, that might lead to rate cuts.

Most likely scenario is rates stay put for an extended period.

Raising rates is not the most likely, but it can’t be ruled out.

If we see a marked labor weakening, it could spur a cut.

Friday’s jobs report was softer than expected, but not actually soft.

New lease rates seem to have ticked up, and that’s a little concerning.

If inflation becomes embedded, we might hike if needed.

It looks like we will go sideways for a while.

We need to be more patient.

Keeping rates where they are for longer than the public expects is much more likely than raising rates.

Too soon to declare inflation progress stalled out.

If Fed needs to hold rates for an extended period, or raise rates, we will do that.

Rate cut this year is still a possibility.

If inflation moves sideways and labor market remains strong, we should not to anything on rates.