Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, stated over the weekend that the Federal Reserve is actually still in a favorable position before starting to cut interest rates, and can take its time to observe the upcoming data.
He said on a Sunday program, "We need to see more evidence to make us believe that inflation is steadily falling to 2%. Before we make any decisions, we are now in a very favorable position to slowly obtain more inflation data, more economic and labor market data."
The Federal Reserve announced its inaction after last June's interest rate meeting, but it is worth noting that the latest released "dot matrix" significantly slashed interest rate cuts: from three in March to only one. Specifically, 11 officials believe that interest rates will only be lowered once at most this year, while the remaining 8 are expected to lower rates twice.
Federal Reserve officials warn that before starting to relax policies, they need to gain more confidence in the target of inflation slowing to 2%, especially after progress stalled earlier this year. Powell also emphasized after the meeting that although he acknowledged that the recent monthly inflation data had eased, his confidence had not yet reached the level of interest rate cuts.
Kashkali specifically pointed out in the program that if interest rates are only lowered once this year, it is likely to be before the end of the year.
Waiting for inflation to continue to cool down
In fact, there is quite a consensus within the Federal Reserve on the issue of inflation: both hawkish and dovish officials feel that they need to wait a bit longer. In addition to Kashkari, the "hawk king", Cleveland Fed Chairman Mester also stated last Friday that despite the latest data being encouraging, she still believes that the inflation risk in the United States is biased upwards.
"In the past two years, we have made quite good progress on the issue of inflation. However, the inflation rate is still too high," she said. "There is still more work to be done on the inflation issue to make people believe that inflation is on a downward trajectory to 2%."
And the representative of the dovish figure of the Federal Reserve, Chicago Fed Chairman Goolsby, also said last Friday that the May CPI was "very good", but this is only one month's data.
"After this week's data showed that inflation cooled in May, I breathed a sigh of relief, but before truly lowering interest rates, I still hope to see similar data performance in 'more months'.".