Fed's Kashkari Opens Door to September Rate Cut Debate

20 August 2024

Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, has indicated a shift in his stance on interest rates, suggesting that a rate cut in September is now a topic worthy of discussion. This change is primarily driven by concerns about a potentially weakening labor market, despite progress in controlling inflation. Kashkari emphasized that while the balance of risks has shifted, any potential rate cut would likely be limited to a quarter percentage point, given that layoffs remain low and unemployment claims don’t indicate significant economic deterioration. This perspective aligns with recent comments from other Fed officials and reflects the changing economic landscape, which has led investors to adjust their expectations for the Fed’s September meeting.

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