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Federal Reserve Bank of Minneapolis President Neel Kashkari expressed his support for the recent interest rate cut by the U.S. Central bank, citing the need to address the risks of Inflation and potential increase in unemployment. He stated that the decision to lower the federal funds rate was appropriate given the progress made on Inflation and the shifting balance of risks towards a weaker labor market.
Kashkari, who is not a voting member of the Federal Reserve’s rate-setting committee this year, had previously been vocal about the need for tighter monetary policy to combat Inflation. However, he now aligns with the majority of policymakers who anticipate further rate cuts in the coming months. He projects a total reduction of one percentage point in the policy rate by the end of next year.
The recent cut in the policy rate aims to support economic growth as Inflation remains subdued and the labor market shows signs of softening. Despite these challenges, consumer spending and economic activity have remained resilient, indicating a lack of imminent recessionary pressures.
Kashkari’s outlook is data-dependent, with a focus on monitoring Inflation trends and labor market conditions. The recent rate cut reflects the Federal Reserve’s commitment to maintaining a supportive monetary policy stance in the face of evolving economic conditions.
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SOURCE
Emma Collins, graduated in Financial Economics from the University of Chicago in the USA in 2016. She has since worked at an asset management firm in New York, where she specializes in investment strategies and portfolio management. Emma has a keen interest in financial analysis and has published several articles in renowned financial journals. Her work focuses on providing actionable insights to investors, and she is known for her forward-thinking approach to managing financial portfolios.
