Minneapolis Fed President Neel Kashkari has refined his expectations for interest rate cuts in 2024, now leaning towards possibility of fewer reductions due to robust economic data emerging since the year’s start.

Initially forecasting two rate cuts for the year, Kashkari expressed in a WSJ Live interview that current economic indicators might necessitate only a single cut. “I was at two in December,” he remarked. “It’s hard to see, with the data that’s come in, that I’d be saying more cuts than I had in December, or potentially one fewer, but I haven’t decided.”

Kashkari emphasized that Fed’s “base case scenario” no longer includes further rate hikes. He suggested that should inflation persist beyond current projections, Fed’s immediate response would be to maintain the existing interest rates for “an extended period of time.” rather than implementing additional increases.

Jerome Powell had his first ever broadcast interview as Fed chair with the Marketplace. On wages, he acknowledged that annual wage growth has moved up from “low twos” five years ago, to close to three” now. And there’s been “very gradual move up”. He noted that wages should “reflect inflation plus productivity”. A “big part” of the slow wage growth is “certainly that inflation has been low and productivity has been low”. Yet, he didn’t have the answer to the question on why employers are not paying higher wages while the labor markets appear to be very tight.

Though, he also noted that “the economy’s in a really good shape” with unemployment at 4%, the lowest in 20 years. And, people are “coming back into the labor force or not leaving it” in the past five years. Fed’s target of PCE, which is “a little bit lower than the CPI” has been below 2% for some time. But it finally hit the 2% core PCE level last month.

Regarding trade policy, Powell noted Trump’s administration “said” it’s trying to lower tariffs. And, “if it works out that way, then that’ll be a good thing for our economy.” However, “if it works our other ways” and there will be high tariffs on a lot of products for a sustained period of tie, “that could be a negative for our economy”. But it’s “hard to sit here today and say which way that’s going”.

But Powell also emphasized that when Fed doesn’t make the policy, “we don’t praise it, we don’t criticize it”. And, “part of the independence that we have is to stick to our lane, stick to our knitting, so really wouldn’t want to comment on fiscal policy really, or trade policy.”

Transcript of the full interview.

Fed Governor Michelle Bowman highlighted concerns over persistently high inflation and a tight labor market. In a speech, she suggested the need for additional monetary policy tightening should these conditions persist.

She stated, “The most recent CPI and employment reports have not provided consistent evidence that inflation is on a downward path, and I will continue to closely monitor the incoming data as I consider the appropriate stance of monetary policy going into our June meeting.”

She emphasized the necessity of a “sufficiently restrictive” policy stance to curtail inflation over time, especially if inflation remains elevated and the labor market continues to be tight.

She further added, “I also expect that our policy rate will need to remain sufficiently restrictive for some time to bring inflation down and create conditions that will support a sustainably strong labor market.”

Despite her clear inclination towards policy tightening, Governor Bowman was careful to stress the uncertainty of economic outlook and the adaptability of Fed’s policy actions.

“Of course, the economic outlook is uncertain and our policy actions are not on a preset course,” she concluded, indicating Fed’s readiness to adjust its approach as necessary in response to evolving economic conditions.

Full speech of Fed Bowman here.