On Monday local time, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, stated that it seems appropriate to "further moderately lower" the benchmark interest rate in the coming quarters.
Kashkari said: "For now, it seems appropriate to further moderately lower the policy interest rate in the coming quarters to achieve our dual mandate."
However, he also stated: "Ultimately, the direction of policy will depend on actual economic, inflation, and labor market data."
The market expects a 0% probability of a 50 basis point rate cut.
Previously in September, the Federal Reserve began its first interest rate cut, unexpectedly lowering the policy interest rate by 50 basis points to 4.75%-5.00%.
According to the dot plot released last month, Federal Reserve officials预计 that the Fed will cut rates by another 50 basis points for the remainder of 2024.
Subsequently released data showed that the inflation indicator for September was higher than expected, and the unemployment rate decreased amid robust hiring.
The U.S. CPI rose 2.4% year-on-year in September, and the core CPI rose 3.3% year-on-year, both exceeding expectations.
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Non-farm employment in September surged by 254,000 people, the largest increase since March 2024, exceeding economists' expectations of 150,000;
The unemployment rate in September fell for the second consecutive month to 4.1%.After the data was released, investors shifted their bets to predict that the Federal Reserve will cut interest rates by 25 basis points at the November meeting, whereas previously there had been expectations for another significant rate cut of 50 basis points.
The latest market estimates suggest that the probability of a 25 basis point rate cut in November stands at 86.1%, with a 13.9% chance of no rate cut, and a 0% chance of a substantial 50 basis point rate cut. For the year, the cumulative probability of a 50 basis point rate cut is 78.8%, and a cumulative 25 basis point rate cut is estimated at 20%.
In response, Kashkari believes that the current policy interest rate is still restricting economic growth, although the extent of this restriction is not yet clear.
Kashkari stated that the labor market remains robust, and the recent employment report "encouragingly indicates that the labor market does not seem to be heading for a rapid weakening soon."
He also added that inflation "has fallen significantly from its peak but is still slightly above our target."
Previously, Kashkari had expressed satisfaction with the Federal Reserve's 50 basis point rate cut in September, suggesting that a "reasonable starting point" would be a 25 basis point rate cut at each of the two remaining meetings this year.
Officials generally support a modest rate cut.
Furthermore, several other Federal Reserve officials support gradual rate cuts.
Last week, Atlanta Fed President Bostic stated that he was "completely comfortable" with the Federal Reserve keeping interest rates unchanged at the November meeting, and he has already anticipated only one more rate cut for the year.
New York Fed President Williams expects that, over time, it will be appropriate to continue shifting the monetary policy stance towards a more neutral setting.Dallas Federal Reserve Chairman Logan also stated: "From now on, it may be appropriate to return to a more gradual policy stance to best balance the risks to our dual mandate objectives."
In a speech at the end of September, Federal Reserve Chairman Powell also clearly indicated that he is not "in a hurry" to lower interest rates, but prefers smaller rate cuts.
Powell also emphasized that the consensus reached by Federal Reserve officials at the September meeting was to cut rates by 25 basis points twice more this year, "which does not mean another substantial rate cut of 50 basis points."