The President of the Federal Bank of Minneapolis (Fed), Neil Kaskari, said that slowing the American economy can make a reduction in interest rate in the near future, while still providing two reductions by the end of the year.
“The economy is slowing down,” he said on Wednesday (6.8.25) in an interview with CNBC. “It may be suitable in the near future to start adjusting the interest rate on federal capital,” he said, referring to the Fed’s main interest rate.
The head of the Fed added that duties are still significant uncertainty and it is unclear what their inflation will be, according to Bloomberg.
“How much can we wait until the impact of duties is clear? This is something that concerns me right now. If the best of the available options is to make some adjustments and then pause or even have to reverse the course. Perhaps this is better than staying stagnant while waiting for a clear picture of duties, “Kaskari said.
He said he continues to see two interest rate cuts by the end of the year, but added that there may be fewer reductions if there are evidence that the inflationary effects of duties are persistent.
Fed officials held interest rates unchanged last week for the fifth consecutive time. With inflation remaining above 2%, policymakers are seeking more clarity on the impact of duties before the next session in September.
However, a weakest than expected employment report revealed a significant slowdown in hiring workers in the quarter to July, which disputes the Fed’s waiting attitude.