There are increasing concerns at Fed on an economic slowdown, and calls for rate reductions become stronger. Now, an official of the key Fed joined the chorus before the critical meeting of September.
The last to support a drop in September is the president of the Federal Reserve Bank of Minneapolis, Neel Kashkari.
Kashkari reports support for rate drops while the economy slows down
In a recent interview with CNBC, Kashkari said the Fed may have to reduce interest rates as soon as signs of a slowdown economy are strengthening.
Although the full impact of new prices is not clear, it thinks it is time to act on existing data showing lower growth. He underlined the softening of employment data and global slowdown, and said that the Fed could not afford to wait too long for the clarity of the price. Kashkari had previously hinted in June that a September Cup was possible.
The rate reduction ratings rise 93%
The chances of a drop in rate in September increased more than 93% according to the CME Fedwatch tool. Kashkari says that two rate drops this year always seem to be a reasonable path. But if new prices are starting to increase more than expected inflation, the Fed may need to break or even increase rates again.
The president of the Fed, Mary Daly, says that the wait for too long could be risky
Most recently, San Francisco president Mary Daly said that the interest rate reduction time was approaching and that there could even be a need for more than two cups this year. Daly said there was no clear sign yet that prices increase higher inflation. But she warned that waiting for too long could be risky.
The Fed held stable interest rates at 4.25 to 4.50% in the last meeting. But two senior officials, Christopher Waller and Michelle Bowman, did not agree. This shows that support for rate drops increases even inside the Fed.
President Trump also continues to put pressure for a drop in Fed rates and even called for a drastic drop of 300 points, although such a decision is widely considered improbable. To support his position, he plans to appoint a pro-radiant candidate to replace the governor of the outgoing Fed Adriana Kugler.
Trump Narrows Fed Chair Shortlist
Trump also reduces his list of candidates to succeed Jerome Powell as president of the Fed in 2026. The restricted list includes Kevin Hassett, Kevin Warsh and two nameless contenders. The secretary of the Treasury, Scott Bessent, was excluded because he prefers to remain in his current role. The governor of the Fed, Christopher Waller, is also considered a potential competitor for the role.
The decision could have a lasting impact on American monetary policy. Although Trump criticized Powell for maintaining high rates, he says that replacing him early remains “very unlikely”. With Kugler who withdraws, Trump will now be able to appoint another republican to the Fed board, potentially someone who could later become the president of the Fed.
