BUENOS AIRES, Oct. 14, 2024 — Minneapolis Federal Reserve President Neel Kashkari said on Monday that modest interest rates are more appropriate in the upcoming quarters despite the restrictiveness in current U.S. monetary policy. Speaking at the Central Bank of the Argentine Republic's money and banking conference, Kashkari noted that though inflation dipped, it remains slightly above the Federal Reserve's 2% target.
Moreover, he noted that despite the strength of the labor market and the unlikelihood of a rapid drop, Kashkari suggested that more rate cuts will likely support the economy without overheating it. "Further modest reductions in our policy rate will be appropriate in the coming quarters," he said, according to his prepared remarks.
Kashkari also commented on the aggressive rate hikes by the Fed from 2022 to 2023, which eventually led to a soft landing. He underscored the importance of having a neutral rate, an interest rate level that neither spurs nor slows economic growth. Also, he warned that rising U.S. fiscal debt could push that neutral rate even higher. Though the Fed has its eyes on global central bank policies, Kashkari emphasized that its decisions are primarily based on the U.S. economy's needs.
