Minneapolis Fed President Neel Kashkari has warned that the economy is slowing down based on recent data points. As a result, a lower federal funds rate could be necessary in order to support employment maximization amid cooling inflation.
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“That tells me, as one policymaker, I need to start leaning more on the data that I’ve got confidence in,” Kashkari said in an interview with CNBC on Wednesday. “The economy is slowing – and that means, in the near term, it may become appropriate to start adjusting the federal-funds rate.” He added that a pair of rate cuts by the end of the year “seems reasonable to me.”
Betting Odds Favor a September Rate Cut
A rate cut during the September 16-17 Federal Open Market Committee (FOMC) meeting is more than likely, according to CME’s FedWatch tool. The tool assigns 89.2% odds that the Fed will cut by 25 bps, up from 46.7% a week ago and 64.0% a month ago.
By the end of the year, the odds stand at a 41.7% chance of two rate cuts and a 47.1% chance of three rate cuts. Each rate cut is equivalent to 25 bps.
Track the FOMC meeting and other key events with TipRanks’ Economic Calendar.
