Minneapolis Fed president anticipating two or three rate cuts in 2024

Minneapolis Federal Reserve President Neel Kashkari said Wednesday he anticipates the Fed will cut interest rates two or three times in 2024.

“Sitting here today, I would say, two or three cuts would seem to be appropriate for me right now,” he told CNBC’s “Squawk Box.” “But again, I don’t want to prejudge things, but that’s, that’s my gut, based on the data we have so far.”

Kashkari, who is not a voting member of the Fed panel that makes decisions on monetary policy, noted the labor market could impact the number and speed of rate cuts this year.

“If the labor market continues to be quite strong, that would give me confidence to say, ‘Well we can dial things back quite slowly from here,’” he said. “If we saw a material slowdown in the labor market, then that would say, ‘Hey, maybe we need to start cutting rates a little more quickly.’” 

Kashkari’s prediction of two or three rate cuts largely falls in line with previous projections from Fed officials in December. All but three officials said at the time that they anticipated at least two cuts in 2024, while the largest share anticipated three.

The Fed has held interest rates steady at a range of 5.25 percent to 5.5 percent for the past four meetings after hiking rates to a two-decade high last year to bring down inflation.

The apparent end of the central bank’s rate hike campaign has prompted optimism about potential rate cuts. However, Fed Chair Jerome Powell has cautioned in recent days that cuts may not come as quickly as some are expecting.

“I think it’s not likely that this committee will reach that level of confidence in time for the March meeting, which is in seven weeks,” Powell said Sunday in a “60 Minutes” interview.

“The kinds of things that would make us want to move sooner would be if we saw weakness in the labor market or if we saw inflation really persuasively coming down,” he added.

The January jobs report, released Friday, far exceeded economists’ expectations, with the U.S. economy adding 353,000 jobs last month and the unemployment rate clocking in at 3.7 percent. 

Inflation has eased significantly since reaching a 40-year high of 9.1 percent in June 2022, most recently coming in at 3.4 percent in December. However, it remains above the Fed’s target of 2 percent.