Latest news with #ratecut
Yahoo
a day ago
- Business
- Yahoo
Fed's Kashkari expects two rate cuts this year, with pause possible
(Reuters) -Federal Reserve Bank of Minneapolis President Neel Kashkari is sticking to his view that cooling inflation will allow the world's most important major central bank to cut its policy rate twice this year, starting in September. In an essay released on Friday, Kashkari also signalled that if progress on inflation stalls or reverses the Fed could simply pause its rate-cutting cycle until prices ease again. Tariffs suggest an inflation boost is "likely coming," he said, as more goods from Asia, subject to the biggest tariff increases, arrive on the shelves of U.S. businesses. While businesses may not want to risk angering customers by charging more for their wares, they will start passing on price increases in the absence of trade deals lowering tariffs, he said. In this scenario, the effect of tariffs on inflation may simply arrive later than expected, Kashkari said. At the same time, Kashkari said, the economic data so far has revealed "only a modest imprint of the effects of tariffs on prices, activity or the labor market," with inflation making renewed progress toward the Fed's 2% goal. That may suggest, he said, that companies have won exemptions, have adjusted their supply routes, or are otherwise finding ways to avoid the tariffs altogether, limiting the impact on inflation. "Those 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," Kashkari said. "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" but could adjust to fit the new data, he added. "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." For now, though, Kashkari said: "We should put more emphasis on the actual inflation and real economic data that we are seeing without committing to an easing policy path in case the effects of tariffs are merely delayed." Last week, Fed policymakers left their overnight target rate for lending between banks unchanged at between 4.25% and 4.5%. Uncertainty over the outlook is keeping the central bank on the sidelines amid expectations the tariffs will push up inflation this year while depressing growth and hiring.
Reuters
a day ago
- Business
- Reuters
Fed's Kashkari expects two rate cuts this year, with pause possible
June 27 (Reuters) - Federal Reserve Bank of Minneapolis President Neel Kashkari is sticking to his view that cooling inflation will allow the world's most important major central bank to cut its policy rate twice this year, starting in September. In an essay released on Friday, Kashkari also signalled that if progress on inflation stalls or reverses the Fed could simply pause its rate-cutting cycle until prices ease again. Tariffs suggest an inflation boost is "likely coming," he said, as more goods from Asia, subject to the biggest tariff increases, arrive on the shelves of U.S. businesses. While businesses may not want to risk angering customers by charging more for their wares, they will start passing on price increases in the absence of trade deals lowering tariffs, he said. In this scenario, the effect of tariffs on inflation may simply arrive later than expected, Kashkari said. At the same time, Kashkari said, the economic data so far has revealed "only a modest imprint of the effects of tariffs on prices, activity or the labor market," with inflation making renewed progress toward the Fed's 2% goal. That may suggest, he said, that companies have won exemptions, have adjusted their supply routes, or are otherwise finding ways to avoid the tariffs altogether, limiting the impact on inflation. "Those 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," Kashkari said. "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" but could adjust to fit the new data, he added. "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." For now, though, Kashkari said: "We should put more emphasis on the actual inflation and real economic data that we are seeing without committing to an easing policy path in case the effects of tariffs are merely delayed." Last week, Fed policymakers left their overnight target rate for lending between banks unchanged at between 4.25% and 4.5%. Uncertainty over the outlook is keeping the central bank on the sidelines amid expectations the tariffs will push up inflation this year while depressing growth and hiring.
Yahoo
2 days ago
- Business
- Yahoo
Majority of Fed Officials Leaning Against July Interest-Rate Cut
(Bloomberg) -- A flurry of Federal Reserve officials this week made clear they'll need a few more months to gain confidence that tariff-driven price hikes won't raise inflation in a persistent way. US Renters Face Storm of Rising Costs US State Budget Wounds Intensify From Trump, DOGE Policy Shifts Mapping the Architectural History of New York's Chinatown Squeezed by Crowds, the Roads of Central Park Are Being Reimagined Commuters Are Caught in Johannesburg's Taxi Feuds as Transit Lags Fed Governors Christopher Waller and Michelle Bowman captured attention in the past week when they signaled they'd be open to lowering rates as soon as the Fed's July 29-30 meeting if inflation remains contained. Since then, however, nearly a dozen policymakers — including Chair Jerome Powell, New York Fed President John Williams and San Francisco Fed chief Mary Daly — have dumped cold water on that idea. In an interview Thursday on Bloomberg Surveillance, Daly acknowledged she's seeing increasing evidence that tariffs may not lead to a large or sustained inflation surge. But that merely made her open to a rate cut 'in the fall.' 'My modal outlook has been for some time that we would begin to be able to adjust the rates in the fall, and I haven't really changed that view,' Daly said. Prices have cooled more than forecast this year, with the Fed's preferred gauge rising 2.1% in April, just above the central bank's 2% target. Data released earlier Thursday also showed continuing claims for unemployment benefits jumped to their highest level since November 2021, extending a sharp increase over the past six weeks and signaling more people are staying out of work for longer. At the same time, initial jobless claims fell in the week ended June 21. Daly said that while the labor market is slowing, she's not seeing warnings signs that its weakening. She repeated her view that monetary policy is currently in a 'good place.' Other Officials Speaking separately Thursday, three other Fed officials signaled they aren't ready to support a cut at the Fed's next meeting. 'We're only going to have really one more month of data before the July meeting,' Boston Fed President Susan Collins said Thursday in an interview with Bloomberg New. 'I expect to want to see more information than that.' Collins said her baseline outlook is to resume cutting later in the year. 'That could mean one rate cut, it's possible it means more than that, but I think the data will really need to tell us,' she said. 'I am not seeing an urgency.' Richmond Fed President Tom Barkin, in remarks to the New York Association for Business Economics, said he expects tariffs will put upward pressure on prices. With so much remaining uncertain, he added, the central bank should wait for more clarity before adjusting rates. 'There is little upside in heading too quickly in any one direction,' Barkin said. 'Given the strength in today's economy, we have time to track developments patiently and allow the visibility to improve.' Chicago Fed President Austan Goolsbee said the central bank could resume rate cuts if inflation is clearly trending toward policymakers' 2% goal and uncertainty over the economic outlook recedes. 'I'm optimistic that we've been getting good readings and maybe the impact of tariffs will be held just in their lane, but we want to be sure,' he said. Powell In testimony before a congressional panel on Tuesday, Powell said the Fed would probably be cutting rates by now, based on declining inflation, if not for the uncertain outlook for future prices because of tariffs. In the meantime, there was no need to rush into any rate changes. 'The effects of tariffs will depend, among other things, on their ultimate level,' Powell said. 'For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.' --With assistance from María Paula Mijares Torres, Amara Omeokwe, Maria Eloisa Capurro, Lisa Abramowicz and Jonathan Ferro. (Updates with Collins comments from 11th paragraph.) How to Steal a House Inside Gap's Last-Ditch, Tariff-Addled Turnaround Push Apple Test-Drives Big-Screen Movie Strategy With F1 America's Top Consumer-Sentiment Economist Is Worried Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags ©2025 Bloomberg L.P.
Yahoo
2 days ago
- Business
- Yahoo
Majority of Fed officials leaning against July interest-rate cut
(Bloomberg) — A flurry of Federal Reserve officials this week made clear they'll need a few more months to gain confidence that tariff-driven price hikes won't raise inflation in a persistent way. Fed Governors Christopher Waller and Michelle Bowman captured attention in the past week when they signaled they'd be open to lowering rates as soon as the Fed's July 29-30 meeting if inflation remains contained. Since then, however, nearly a dozen policymakers — including Chair Jerome Powell, New York Fed President John Williams and San Francisco Fed chief Mary Daly — have dumped cold water on that idea. In an interview Thursday on Bloomberg Surveillance, Daly acknowledged she's seeing increasing evidence that tariffs may not lead to a large or sustained inflation surge. But that merely made her open to a rate cut 'in the fall.' 'My modal outlook has been for some time that we would begin to be able to adjust the rates in the fall, and I haven't really changed that view,' Daly said. Prices have cooled more than forecast this year, with the Fed's preferred gauge rising 2.1% in April, just above the central bank's 2% target. Data released earlier Thursday also showed continuing claims for unemployment benefits jumped to their highest level since November 2021, extending a sharp increase over the past six weeks and signaling more people are staying out of work for longer. At the same time, initial jobless claims fell in the week ended June 21. Daly said that while the labor market is slowing, she's not seeing warnings signs that its weakening. She repeated her view that monetary policy is currently in a 'good place.' Speaking separately Thursday, two other Fed officials signaled they aren't ready to support a cut at the Fed's next meeting. Richmond Fed President Tom Barkin, in remarks to the New York Association for Business Economics, said he expects tariffs will put upward pressure on prices. With so much remaining uncertain, he added, the central bank should wait for more clarity before adjusting rates. 'There is little upside in heading too quickly in any one direction,' Barkin said. 'Given the strength in today's economy, we have time to track developments patiently and allow the visibility to improve.' Chicago Fed President Austan Goolsbee said the central bank could resume rate cuts if inflation is clearly trending toward policymakers' 2% goal and uncertainty over the economic outlook recedes. 'I'm optimistic that we've been getting good readings and maybe the impact of tariffs will be held just in their lane, but we want to be sure,' he said. In testimony before a congressional panel on Tuesday, Powell said the Fed would probably be cutting rates by now, based on declining inflation, if not for the uncertain outlook for future prices because of tariffs. In the meantime, there was no need to rush into any rate changes. 'The effects of tariffs will depend, among other things, on their ultimate level,' Powell said. 'For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.' —With assistance from María Paula Mijares Torres, Amara Omeokwe, Maria Eloisa Capurro, Lisa Abramowicz and Jonathan Ferro. ©2025 Bloomberg L.P.
Bloomberg
2 days ago
- Business
- Bloomberg
Fed's Daly Says Muted Tariff Impact May Open Door to Cut in Fall
By Catarina Saraiva and Updated on Save Federal Reserve Bank of San Francisco President Mary Daly said she's seeing increasing evidence that tariffs may not lead to a large or sustained inflation surge, helping bolster the case for a rate cut in the fall. 'My modal outlook has been for some time that we would begin to be able to adjust the rates in the fall, and I haven't really changed that view,' Daly said Thursday in an interview on Bloomberg Television.
