Neel Kashkari Expects Only Two or Three Rate Cuts This Year

Minneapolis Fed chief Neel Kashkari expects the Federal Reserve to cut interest rates just two or three times this year, far fewer cuts than financial markets appear to be forecasting.

“Sitting here today, I would say, two or three cuts would seem to be appropriate for me right now,” the president of the Minneapolis Fed said during an interview on CNBC Wednesday.

Kashkari is not a voting member of the Federal Open Market Committee (FOMC), the panel that sets interest rate policy, this year. Presidents of the regional Fed banks rotate through voting positions on the FOMC. Kashkari will next be a voting member in 2026.

Markets have been implying an aggressive series of Fed cuts this year—inviting push back from Fed officials who say they are taking a cautious approach and see the strength of the economy as providing the opportunity to see how the economy develops before they make the call to cut rates.

Until last week, markets were predicting the Fed would cut in March. Fed officials at the FOMC meeting that ended last Wednesday implied that they were likely to hold off on cuts until they had gained more confidence that inflation would return to two percent and stay there. Currently, however, market prices imply a nearly one-in-four chance of a March cut.

A cut by the FOMC’s May meeting, once seen as a certainty, is now given around a 70 percent chance. A cut by June, however, is seen as a lock, according to the CME’s Fedwatch Tool.

The Fed is scheduled to release a new set of the economic projections of its officials at the June meeting. (There’s also a set due in March.)  Some analysts think that Fed officials would see that as an opportune time to announce the first rate cut of the economic cycle.

“The chair could explain the policy decision more clearly by referring to participants’ views on the outlook and the appropriate policy path,” analysts at Bank of America said Wednesday in a client note.

If the Fed cut in June and then cut every other meeting this year, it would cut a total of three times.

Breitbart Business Digest yesterday argued that the Fed was likely to cut only two or three times this year. It also argued that the market was underpricing the chance of a Fed hike if inflation begins to rise.