Kashkari Signals Fewer Rate Cuts at the Fed
Minneapolis Fed President Neel Kashkari indicated that if the U.S. economy strengthens, the number of interest rate cuts may be fewer than expected. Emphasizing the sustainability of economic productivity and growth, Kashkari stated that having a productive economy could result in the Fed making fewer cuts. He noted that it is still early to make a definitive prediction about how the policies of the new Trump administration and Congress will impact inflation.
On the other hand, the proposed tariffs by President-elect Donald Trump could raise potential global trade disputes. Kashkari warned that if other countries implement similar tariffs, long-term inflation might rise. He highlighted that inflation could accelerate in such a trade environment, leading to increased economic uncertainties.
Widespread deportation policies and inflation effects Kashkari expressed that the widespread deportation policies mentioned during Trump's campaign could lead to labor disruptions in certain sectors. Specifically, the deportation of undocumented immigrants working in farms and factories could create production bottlenecks in those sectors. However, he stated that the overall impact of these policies on the economy would depend on the details.
Additionally, Kashkari mentioned that he is not concerned about a potential conflict between the Fed and the Trump administration. He underscored that both Democrats and Republicans want inflation to decrease and expressed that he is not worried about the dynamics in Washington regarding this issue.
ECB signals interest rate cut in December European Central Bank (ECB) policymaker Robert Holzmann expressed plans to lower interest rates in December. Holzmann noted that, based on current data, there is no reason not to proceed with such a cut. However, he added that the final decision would be based on the economic data available at that time.
Last month, the ECB had implemented its third interest rate cut of the year, and it is anticipated that a fourth cut could occur in December if there are no favorable changes in economic data. Austrian National Bank Governor Holzmann stated that they would assess the final decision according to the data, mentioning that while there is currently no significant obstacle, the process will not become automatic.