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Neel Kashkari signals rising angst about cooling economy
"The economy is slowing, and that means in the near term it may become appropriate to start adjusting," Kashkari said.
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Reuters - Wed, 06, Aug 2025
- 16:12 EDT
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FILE PHOTO: Neel Kashkari, President and CEO of the Federal Reserve Bank of Minneapolis, speaks during an interview with Reuters in New York City, New York, U.S., May 22, 2023. / REUTERS/Mike Segar/File Photo
Less than a week after deciding against an interest-rate cut, some Federal Reserve policymakers are signaling rising angst about a cooling U.S. labor market and a slowing economy, even as they continue to express uncertainty about the outlook for inflation, which remains stuck above the Fed's 2 percent goal.
Minneapolis Fed President Neel Kashkari on Aug. 6 said that for him, it all adds up to a case for interest rate cuts in coming months.
Also Read: Neel Kashkari says more clarity needed on tariffs' impact on inflation
"The economy is slowing, and that means in the near term it may become appropriate to start adjusting," Kashkari said on CNBC's Squawk Box, adding that two quarter-percentage-point rate cuts by the end of the year "seems reasonable to me."
Recent data "suggests the real underlying economy is slowing. I've got confidence that that is happening," Kashkari said. "How long can we wait until the tariff effects become clear? That's just weighing on me right now."
Speaking early this week to Reuters, San Francisco Fed President Mary Daly said it could take six months or more to learn whether the Trump administration's tariffs will push up inflation persistently. Meanwhile, while she was "willing" to leave rates on hold last week, the slowing labor market makes her increasingly uncomfortable about making that same decision in upcoming meetings, she said.
Like Kashkari, she views two rate cuts this year as probably appropriate, though given the state of the economy she said that doing more than two rate cuts is more likely than doing fewer.
Neither Kashkari nor Daly has a vote on interest rate policy this year, but their arguments are similar to those made by two Fed governors who dissented at the Fed's decision last week to hold the policy rate steady while awaiting more clarity on how rising import tariffs will feed through to consumer prices.
Two days after the meeting, the Labor Department released a monthly jobs report that showed weaker-than-expected job growth in July and big downward revisions to payroll estimates for May and June.
"This is concerning," Fed Governor Lisa Cook said of the report, noting that revisions typically occur at inflection points in the economy.
Cook did not say how the fresh labor market data has influenced her view on appropriate monetary policy.
She, like Kashkari and Daly, said she is also focused on whether any increase in prices will be one time or more persistent.
"It is critical that we try to understand better which one this could be, but it's limited and the information we have is limited and the way we can incorporate it into our models is limited," she said.
President Donald Trump, who has pushed for sharply lower interest rates, has said he will nominate a new member to the Fed's Board shortly, following Fed Governor Adriana Kugler's surprise resignation last week.
It's unclear if the new governor would function as a Fed chief-in-waiting until Jerome Powell completes his term as Fed chair on May 15, or would merely serve out the rest of Kugler's term, which runs to the end of January.
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