Mr. Kashkari believes that cutting interest rates twice this year is appropriate but will depend on inflation developments.

The head of the Minneapolis branch of the Fed emphasizes that if inflation rises due to tariffs, the U.S. Central Bank may pause lowering interest rates or adjust to increase them again.

MAIN CONTENT

  • Two interest rate cuts in 2023 are considered appropriate.

  • The decision may change if inflation increases due to tariffs.

  • The Fed may pause or raise interest rates depending on the economic situation.

What is Mr. Kashkari's assessment of the Fed's interest rate cut roadmap in 2023?

Mr. Kashkari, President of the Minneapolis Fed, believes that implementing two interest rate cuts in 2023 is reasonable to support the economy. However, he emphasizes that monetary policy decisions will need to be flexible, depending on the actual developments of inflation and other economic risks.

He notes that lowering interest rates helps stimulate growth and stabilize the labor market but must be cautious about inflationary pressures to avoid causing financial shocks. Therefore, the policy will be closely monitored and may be adjusted as necessary.

How will the Fed respond if inflation rises due to tariffs?

As inflation rises due to pressure from tariffs, Mr. Kashkari warns that the Fed may need to pause or even raise interest rates instead of continuing to lower them to control risks. This is a step to ensure that price pressures do not spread and negatively affect the U.S. economy.

This reflects the Fed's caution in the context of external volatility such as trade wars or tariff policies that could lead to high inflation, while also ensuring that monetary policy aligns with the goals of price control and sustained growth.

Monitoring inflation related to tariffs is necessary to decide on the interest rate trajectory in the near future.

Neel Kashkari, President of the Minneapolis Fed, August 2023

What economic factors influence the Fed's decision to cut interest rates?

The decision to cut or maintain the Fed's interest rates depends on many factors such as the unemployment rate, GDP growth rate, and especially inflation. Tariffs are one of the factors that can exert pressure on the consumer price index, thereby affecting monetary policy.

The Fed needs to carefully consider the balance between supporting economic growth and controlling inflation to avoid creating asset bubble risks or financial market instability. Therefore, any moves on interest rates will be based on actual economic data and forecasts based on different scenarios.

Frequently Asked Questions

How many times does Mr. Kashkari propose to cut interest rates in 2023?

Mr. Kashkari believes that two interest rate cuts in 2023 are appropriate but may be adjusted depending on inflation developments.

What will the Fed do if inflation rises due to tariffs?

In that case, the Fed may pause lowering interest rates or raise them again to control price pressures.

What key factors influence the Fed's interest rate decisions?

Inflation, particularly due to tariffs, along with economic growth and the labor market, are key factors determining policy.

Why does the Fed need to be cautious when adjusting interest rates?

To balance between promoting growth and controlling inflation, avoiding negative impacts on macroeconomics and financial markets.

How does the Fed's actions affect global monetary markets?

Changes in interest rates in the U.S. often lead to significant fluctuations in the monetary market and affect global capital flows.

Source: https://tintucbitcoin.com/fed-kashkari-hai-lan-ha-lai-suat-2024/

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