Fed’s Kashkari advocates two more rate cuts this year

Minneapolis Fed President Expects Tariffs to Have Minimal Long-Term Inflation Impact

Minneapolis Federal Reserve President Neel Kashkari stated on Friday that he believes President Donald Trump’s tariffs will have minimal long-term impact on inflation, allowing for potential interest rate cuts in the future.

In an interview with CNBC, Kashkari outlined his support for the Fed to lower its benchmark borrowing rate at each of the remaining meetings this year, in addition to the recent rate cut approved by the Federal Open Market Committee. This more dovish stance on interest rates comes despite inflation currently exceeding the central bank’s 2% target.

Kashkari cited a weakening labor market and the limited effect of Trump’s tariffs as reasons for his advocacy for looser monetary policy. Despite inflation running ahead of target, he believes that the tariffs may only have a temporary impact on prices.

While Kashkari does not have a vote on the FOMC this year, he will in 2026.

The recent rate cut was approved by the committee with an 11-1 majority, signaling consensus among officials. This meeting also marked the first participation of new Governor Stephen Miran, appointed by President Trump, who has been critical of Fed Chair Jerome Powell.

Kashkari emphasized that the meeting was uneventful and without discord among members.

In a piece on the Minneapolis Fed website, Kashkari explained his rationale for supporting three total rate cuts this year. He highlighted that despite concerns over tariffs causing inflation spikes, inflation expectations remain stable. Additionally, he noted a decrease in housing inflation and wage growth.

Although the consumer price index for August showed core inflation at 3.1%, above the Fed’s target, Kashkari emphasized that the central bank is not comfortable with such high inflation levels.