Minneapolis Fed president says more evidence needed to show that inflation is going down

Minneapolis Federal Reserve President Neel Kashkari said more evidence needs to be shown to prove that inflation is on a downward trend to cut interest rates.

The Federal Reserve held interest rates at a 23-year high last week, keeping rates in a range of 5.25 percent to 5.5 percent. Kashkari said on CBS’s “Face the Nation” that they need to see more evidence that inflation is nearing its goal of 2 percent before cutting interest rates.

CBS’s Margaret Brennan asked Kashkari what else he needed to see to support cutting rates, noting that Canada and Europe have each already announced interest rate cuts.

“We need to see more evidence to convince us that inflation is well on our way back down to 2 percent. The good news is as you’re reporting this indicator, the job market remains strong,” Kashkari said.

“But there’s a really important difference between the U.S. and those other countries. The U.S. economic fundamentals are much stronger than in most other advanced economies around the world,” he said. “So they’re facing declining inflation and economic weakness, we’re facing declining inflation slowly, but economic strength. And that’s what’s leading to this divergence in monetary policies.”

He also said that it was a “reasonable prediction” for the Fed to cut interest rates “once” this year, but that they will wait until December to do so.

“And we’re in a very good position right now to take our time, get more inflation data, get more data on the economy, on the labor market, before we have to make any decisions. So we’re in a strong position. But if you just said there’s going to be one cut, which is what the median indicated, that would likely be toward the end of the year,” he said.