Minneapolis Fed President Neel Kashkari stated that considering another rate cut at the Fed's December meeting is still appropriate.
Kashkari said on Bloomberg TV on Monday in response to a question about whether decision-makers should consider lowering borrowing costs by 25 basis points at the last meeting of the year: "This is still a reasonable consideration. Now, based on what I understand today, considering a 25 basis point rate cut in December is a reasonable debate for us."
Kashkari said that the economy's resilience in the face of rising interest rates suggests that the neutral interest rate (where policy neither constrains nor stimulates economic growth) may now be higher.
He said this raises questions about the extent to which monetary policy has helped cool economic demand. The longer this resilience lasts, the more he believes this shift may be structural rather than merely temporary.
Kashkari said: "This is what I want to understand right now: how much downward pressure we are putting on the economy and what the path of inflation is."
In recent months, policymakers have cut interest rates by 75 basis points, including a 50 basis point rate cut in September. They will meet again on December 17-18. Some officials have expressed support for lowering rates at a more gradual pace in the future.
Federal Reserve officials will receive more data on inflation and the labor market before the December meeting. The Fed's preferred latest price index will be released on Wednesday. In recent months, the inflation rate has gradually approached the Fed's 2% target, but progress has slowed.
Kashkari said: "I have some confidence that it is on a slow downward trend, and the labor market remains strong."
He said that while a one-time tariff could lead to a one-time price increase, if foreign countries retaliate, it could continue to push prices up.
Additionally, Chicago Fed President Goolsbee stated that he expects the Federal Reserve to continue lowering interest rates to achieve a goal that neither restricts nor promotes economic activity.
"Unless there is compelling evidence that the economy is overheating, I see no reason not to continue lowering the Federal Reserve's funds rate," Goolsbee said on Monday while participating in a Fox Business program, referring to the Fed's benchmark rate.
He added: "The speed at which this happens will depend on the outlook and conditions. But in my view, we are on a clear path that will lead to lower interest rates, closer to the neutral rate."
He said that his forecast for the neutral interest rate is close to the median estimate of officials, which is 2.9% predicted in September.
Goolsbee stated on Monday that it is important not to 'overdraw conclusions' from one month's data.
He said: "I think the general trend of inflation is that in the more recent months, the inflation rate has tended to be lower than expected, but it has not far exceeded the 2% target."
Article reposted from: Jin Ten Data
