Fed's Kashkari Discusses Inflation and Economic Outlook

According to BlockBeats, Federal Reserve official Neel Kashkari recently stated that there is no evidence of a rise in long-term inflation expectations. He noted that investors might believe a reduction in the trade deficit could lessen the U.S.'s investment appeal. The weakening dollar suggests a shift in investor preferences, which could be credible. Kashkari emphasized that the current market conditions are far from those seen during the COVID-19 pandemic, and there is potential to manage transitional processes to address some imbalances. However, it remains uncertain where yields will stabilize, and the focus is on smoothing these changes. The Consumer Price Index (CPI) data shows several positive signals, but tariffs have contributed to inflation and reduced economic activity. The economic outlook largely depends on the progress and speed of tariff negotiations. If inflation issues persist, it may take longer to reach a comfortable level for lowering interest rates. Kashkari believes that intervention by the Federal Reserve or the Treasury should only occur when absolutely necessary and should be cautious to avoid signaling a weakened commitment to reducing inflation. The Federal Reserve has tools available to provide additional liquidity if needed.