FED: Kaskhari Is A Two-Cutter For 2025 (But With Nuance), Collins A 1 or 2

Minneapolis Fed President Kashkari (non-2025 FOMC voter but votes in 2026) writes in an essay out Friday that he has maintained his expectation for two 25bp rate cuts by end-2025, which he says is an unchanged view over his last 3 dot plots submissions. Note that he basically precludes the notion of a July rate cut, similar to the vast majority of FOMC speakers we've heard from since the June meeting. However, his overall June Dot Plot submission is among the most dovish on the Committee.

• However, Kashkari's outlook for rates is a little more nuanced than others we've seen - he effectively suggests that the Fed could cut later this year but condition future cuts on further evidence that the effects of tariffs weren't showing up in inflation.
• He writes "Since March, we have seen much larger than expected tariffs announced and then modestly pulled back, suggesting that an inflation boost is likely coming. At the same time actual inflation data indicate renewed progress toward our inflation target. These opposing signals have led me to maintain my outlook for two cuts over the remainder of 2025, implying a possible first cut in September, barring some surprising development before then. If we were to cut in September and then the effects of tariffs showed up this fall, I believe we should not be on a preset easing course. If the data called for it, we could hold the policy rate at the new level until we gained greater confidence that inflation was headed back to our target."
• He also sees a further 3 cuts in 2026 (to 3.1%) and another in 2027 (to 2.9%) with his longer-run rate at 2.9%. These projections make his submissions some of the most dovish on the Committee. Just 4 (including Kashkari) of 19 members saw rates at 3.1% or below in the June SEP. 4 (including Kashkari) of 19 members currently see 2.9% L-R rates, with 4 below that (median 3.0%), while 3 (including Kashkari) see 2027 end-year rates of 2.9%, with just 2 below that (median 3.4%).
• Separately, Boston's Collins (a 2025 voter) had already said this week she'd expected to cut later this year, but in a Bloomberg interview Thursday she all but ruled out support for a July cut: “We’re only going to have really one more month of data before the July meeting... I expect to want to see more information than that.” She says “that could mean one rate cut, it’s possible it means more than that, but I think the data will really need to tell us...I am not seeing an urgency." That could place her on the slightly more hawkish side of the June Dot Plot (10 saw 2 or more cuts) but it's unclear whether she actually penciled in 1 or more cuts (we would assume 1 or 2).