On Wednesday, Neel Kashkari, the President of the Minneapolis Federal Reserve Bank, hinted that stronger economic data since the beginning of the year may have led the Federal Reserve to cut interest rates only twice this year, or even once.
He said in an interview, "I expected to cut interest rates twice this year in December last year," referring to the quarterly economic forecast released by Federal Reserve decision-makers last time. The new forecast will be released in two weeks, and the Federal Reserve will hold its next meeting to formulate policies.
"From the already released data, it's hard for me to believe that this year's interest rate cut will exceed my expectations for December last year. In most cases, I may be the same as December last year, or maybe even less, but I haven't made a decision yet," he added.
His colleagues predicted in December last year that interest rates would be cut three times this year, which would lower the Federal Reserve's policy rate from the current range of 5.25% -5.5% to 4.5% -4.75%. Since the beginning of this year, Federal Reserve officials have repeatedly emphasized that the future path of interest rate cuts will depend on data, and Chairman Powell reiterated this position on Wednesday.
Powell stated during the hearing that this year's interest rate cut will depend on the direction of economic development. He said, "Our focus is on maximizing employment and price stability, as well as the upcoming data on the impact outlook. Before lowering policy interest rates, we hope to see more data on sustained decline in inflation rates."
Kashkali stated that the "basic situation" is that the Federal Reserve will not further raise interest rates, which is the view shared by all Federal Reserve decision-makers based on the estimates released in December and subsequent statements.
He added that if the economy remains resilient and inflation is more deeply rooted than expected, "the first thing we need to do is to maintain interest rates unchanged for a longer period of time.". Kashkali is currently a representative figure of the hawkish camp in the Federal Open Market Committee (FOMC), but he does not have voting rights on monetary policy this year.
He also stated that the Federal Reserve does hope to avoid an economic downturn and achieve a so-called "soft landing", which is a decrease in inflation, but the job market will not collapse, just as the Federal Reserve has done in combating excessive inflation.
But now, he said, "If the economy performs very well, perhaps the economy can maintain this interest rate environment, and we are not aware that this is possible."