LONDON — Minneapolis Fed President Neel Kashkari told CNBC on Tuesday that the Fed should wait for significant progress in inflation before cutting interest rates.
Asked what it would take for the Fed to cut interest rates once or twice this year, Kashkari said: “I think it will take several months of positive inflation data to convince me that a rate cut is appropriate. “
He said the central bank may even raise interest rates if inflation fails to fall further. “I don’t think we should rule anything out at the moment,” Kashkari added.
U.S. inflation in April was slightly lower than expected at 0.3%, giving policymakers a sigh of relief. Still, the index rose 3.4% year over year.
Kashkari said he was confident the Fed would eventually hit its 2% inflation target, but added: “I don’t think there’s a need to rush into lowering rates, I think we should take some time to prepare.”
He pointed out that the central bank may consider raising the target interest rate in the future, but said that it is not appropriate to “move the target” at this stage.
it appeared after kashkari explain Earlier this month, the Fed suggested it might need to keep interest rates steady “for an extended period of time” – possibly throughout the year – to achieve its goals.
There has been a divergence of views on the outlook for interest rates among major central banks, with the Fed, which usually acts first, becoming more hawkish as inflation remains elevated.
The European Central Bank is now expected to cut interest rates before the Federal Reserve, with two key figures at the European Central Bank expressing support for a rate cut in June on Monday.
The Bank of England is widely expected to cut interest rates this summer.
This is a developing story and will be updated soon.
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