Fed’s Kashkari: Inflation Remains ‘Sideways,’ Rate Cuts Unlikely In Near Future

Minneapolis Federal Reserve Bank President Neel Kashkari recently stated that inflation is currently moving “sideways,” and the U.S. economy will require “many more months of positive inflation data” before considering one to two rate cuts this year. His comments suggest that interest rates may remain high for an extended period, despite earlier predictions of multiple cuts in 2024.

In a conversation with CNBC Europe Kashkari recognized that government expenditure has played a role in the rise in inflation. Nonetheless he highlighted that disruptions on the supply side like the closure of services during the pandemic, Russias actions in Ukraine affecting commodity prices and tangled up supply chains were factors.

Kashkari also mentioned that the American economy has shown strength with solid growth in GDP and consumer spending going against previous predictions of an economic downturn. This resilience along, with a housing market has convinced him that there’s no urgency to make quick decisions on cutting rates.

The Minneapolis Fed president’s comments align with the central bank’s plan to keep interest rates higher to tame post-pandemic inflation. However, this approach has wide-ranging implications for U.S. consumers, as higher rates make debt more expensive at a time when delinquency rates are mounting.

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