Fed’s Kashkari: Staying patient amid tariff uncertainty, sees strong economy

Minneapolis Fed President Neel Kashkari reiterated Fed’s cautious stance overnight, emphasizing that policymakers remain in “wait and see mode” as they monitor the economic fallout from tariff policy. He noted that while officials are hesitant to make any “dramatic changes” to the policy outlook just yet, their priority is to gain clarity on how tariffs will impact inflation and broader growth dynamics.

Kashkari struck a generally optimistic tone on the domestic economy, saying the fundamentals remain “quite strong” and that inflation appears to be trending back toward the 2% target. He pointed to recent data suggesting underlying inflation is running near 2.5%, which—while still above target—is showing a welcome moderation.

However, the lingering uncertainty around tariffs continues to cloud the outlook. Kashkari warned that “nervousness” around trade is leading some firms to pause investment and may amplify inflation risks. While ongoing negotiations offer a path forward, he made clear that “ultimately we need to see what actually happens and then adjust our analysis of the economy.”