U.S. Federal Reserve Update

By Michael S. Derby

(Reuters) – U.S. Federal Reserve Bank of Minneapolis President Neel Kashkari stated on Monday that further rate cuts are likely as the 2% inflation target approaches.

"As of right now, it appears likely that further modest reductions in our policy rate will be appropriate in the coming quarters to achieve both sides of our mandate," Kashkari mentioned during a speech at a conference hosted by the Central Bank of the Argentine Republic. He added, "Ultimately, the path ahead for policy will be driven by the actual economic, inflation, and labor market data."

Kashkari noted that the current monetary policy stance, with the federal funds rate between 4.75% and 5%, remains restrictive for growth, though the extent remains unclear.

He highlighted that the Fed is "in the final stages of bringing inflation down to our 2% target," while also acknowledging that recent strong job market data indicates the labor sector is robust and not on the verge of decline.

Kashkari's remarks come as the Fed contemplates how much further it can adjust interest rates amid easing price pressures and a solid economy.