- Hurdle to changing policy rate has increased due to tariffs
- Bar is higher for cutting rates even if the economy and labor market weakens
- Falling neutral rate due to tariffs reduces immediate need for rate hike
- It’s ‘too risky’ to look through inflation effects of tariffs
- First priority must be keeping long-run inflation expectations anchored
The market is pricing in 114 bps in cuts in the year ahead but Kashkari is pushing back. Other Fed members have hinted at similar thinking.
This article was written by Adam Button at www.forexlive.com.
