Fed Doubts Grow Over December Rate Cut

Federal Reserve Bank of Minneapolis President Neel Kashkari said he did not support the U.S. central bank’s last interest-rate cut, though he remains undecided on the best course for the December policy meeting, Matthew Boesler and Catarina Saraiva reported for Bloomberg News.

Several Fed officials have in recent days expressed skepticism about the need for another cut in December. Others outright oppose such a move. (Photo: Federalreserve Flickr) 

“The anecdotal evidence and the data we got just implied to me underlying resilience in economic activity, more than I had expected,” Kashkari said Thursday in an interview with Bloomberg.

That, he explained, argued for a pause on rate cuts at the Fed’s October meeting.

Since then, new data have suggested “more of the same” for the economy, he added. For the upcoming Dec. 9–10 rate decision, “I can make a case depending on how the data goes to cut, I can make a case to hold, and we’ll have to see.”

With his remarks, Kashkari joins several Fed officials who in recent days have expressed skepticism about the need for another cut in December — or who outright oppose one.

It remains unclear whether they can sway enough voting members of the Federal Open Market Committee (FOMC), given that several policymakers remain more concerned about weakness in the labor market.

Kashkari does not hold a vote on rate decisions this year but participates in FOMC deliberations.

Financial markets have noticed the recent wave of comments from the Fed’s inflation hawks. Investors have marked down the odds of a December rate cut to about 50%, based on federal funds futures.

Before the Fed’s October meeting, the probability was close to 100%.