MNI BRIEF: Fed’s Kashkari Sees Two Rate Cuts This Year

Federal Reserve Bank of Minneapolis President Neel Kashkari said Friday he sees two interest-rate cuts as likely this year, with the first potentially in September, but he maintained that policymakers should remain flexible in case inflation from tariffs take longer to appear.

"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," he wrote in a blog. "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." (See: MNI INTERVIEW: Fed To Cut Twice In 2025 On Weak Growth-Haslag)

"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 added.