Federal Reserve Kashkari said on Monday that the US benchmark interest rate may be close to a “neutral level” and that future monetary policy will depend on the direction of economic data. Kashkari pointed out that although the market has been expecting the economy to slow down in the past two years, the resilience shown by the US economy far exceeds expectations. He believes that this shows that the current monetary policy is not as great as expected, and interest rates may already be in a neutral zone that neither stimulates nor inhibits economic growth. He stressed that the Federal Reserve is currently facing a double risk: on the one hand, the long-term inflationary pressure that may be brought about by the tariff policy, which may take several years to fully show; on the other hand, there is a risk of a sudden rise in the unemployment rate. He said that the Federal Reserve needs more data to determine which is the more dominant influence, inflation or the labor market, in order to determine the future policy direction.
Zhitongcaijing·01/05/2026 13:57:07
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Federal Reserve Kashkari said on Monday that the US benchmark interest rate may be close to a “neutral level” and that future monetary policy will depend on the direction of economic data. Kashkari pointed out that although the market has been expecting the economy to slow down in the past two years, the resilience shown by the US economy far exceeds expectations. He believes that this shows that the current monetary policy is not as great as expected, and interest rates may already be in a neutral zone that neither stimulates nor inhibits economic growth. He stressed that the Federal Reserve is currently facing a double risk: on the one hand, the long-term inflationary pressure that may be brought about by the tariff policy, which may take several years to fully show; on the other hand, there is a risk of a sudden rise in the unemployment rate. He said that the Federal Reserve needs more data to determine which is the more dominant influence, inflation or the labor market, in order to determine the future policy direction.