Fed's Kashkari Rules Out Early Rate Cuts Amid Inflation Concerns
Federal Reserve Governor Neel Kashkari has poured cold water on hopes for a January rate cut, emphasizing that current economic conditions do not justify a shift toward easier monetary policy. His comments reflect growing consensus among policymakers that patience is still required.
Strong Economy Undermines Dovish Bets
With inflation still above target and the labor market showing remarkable resilience, central bankers are reluctant to signal any imminent policy pivot. Wage growth and persistent service-sector inflation remain key concerns.
Kashkari warned that moving too soon could reignite price pressures, ultimately leading to deeper rate hikes later—a scenario the Fed aims to avoid.
Markets Adjust Expectations
- Traders have scaled back bets on first-quarter rate reductions
- Fed funds futures now price in less than a 20% chance of a January cut
- Multiple Fed speakers have echoed the need for more data before any decision
The central bank appears committed to a data-dependent approach, prioritizing price stability over premature easing. As a result, elevated borrowing costs are likely here to stay for the foreseeable future.