"Interest Rate Cuts Throw Cold Water" The Federal Reserve (FED) Kashkari: The inflation impact of Trump's tariffs is not a short-term phenomenon, and the Fed should not rush to adjust the Interest Rate.

According to Reuters, Neel Kashkari, chairman of the Federal Reserve Bank of Minneapolis, who has voting rights at the FOMC meeting, said yesterday (27) that the Fed should maintain interest rates stable until the impact of US President Donald Trump's tariff policy on inflation becomes clearer. (Synopsis: Trump tariffs may delay Fed rate cuts!) Fed official: If inflation improves, interest rates will fall sharply in the next 12-18 months) (Background supplement: Why is the Fed sticking to high interest rates? Fed sounding board: Powell is waiting for a "rotten enough" recession signal, Goldman Sachs expects to start cutting interest rates in July) According to Reuters, Neel Kashkari, chairman of the Federal Reserve Bank of Minneapolis, who has voting rights at the FOMC meeting, said yesterday (27) at a meeting hosted by the Bank of Japan in Tokyo that the Fed should maintain interest rates until the impact of US President Donald Trump's tariff policy on inflation becomes clearer. At the same time, Kashkari also warned that the supply-price shock caused by tariffs should not be "ignored". Kashkali: The impact of tariffs should not be seen as a short-lived phenomenon Kashkari pointed out that the sweeping tariffs imposed by the Trump administration and the uncertainty of US trade policy are forcing the central bank to choose between fighting inflation and supporting economic activity. He revealed that there is a "healthy debate" going on within the Fed, with some policymakers tending to view tariff-induced inflation as a temporary shock, advocating "ignoring" its impact and prioritizing interest rate cuts to boost economic growth. However, Kashkari agrees, arguing that trade talks can be protracted and that the impact of tariffs should not be taken lightly as a short-lived phenomenon. "Negotiations could take months or even years to conclude completely, and there could be-for-tat tariff retaliation as trading partners respond to each other," he said. At the same time, he further explained that tariffs on intermediate goods take time to gradually pass on to final prices, which may lead to persistent inflationary pressures. He stressed: These arguments support the position of maintaining the current policy rate, which is likely to be only a modest limit until the path of tariffs and their impact on prices and economic activity becomes clearer. In addition, Kashkari also specifically mentioned that US inflation has exceeded the Fed's 2% target for four consecutive years, and the risk of de-anchoring long-term inflation expectations is worrying. "Personally, given my importance in prioritizing defending long-term inflation expectations, I think these arguments are more compelling," he said. Finally, he criticizes the view that there is an over-reliance on simple policy rules such as the Taylor rule, which, while attractive for their "apparent elegance and removal of imperfect human judgment," can lead to "absurd proposals" in the event of significant economic disruption. Kashkari stressed that policymakers should use judgment in the face of major shocks such as tariffs, rather than relying solely on mechanical rules. He further noted that significant shocks create a double uncertainty for policymakers: understanding the underlying dynamics of the shocks themselves, and determining appropriate policy responses. "At times like these, buying more time for more information to help policymakers make collective judgments may be the best of a range of imperfect options," he said. Note: Kashkari was known for his dovish stance at the Fed in the past, with a long-standing emphasis on maximum employment and solid inflation, preferring to keep interest rates low to support the economic recovery, but the current stance also appears to have changed. Market bets on Fed to cut interest rates as early as September According to CME Group's FedWatch tool, the market currently expects that the Fed will not cut interest rates in June and July, and will not restart the pace of rate cuts until September, with a probability of 47.9%. However, there is still a 41.5% chance that the Fed will not cut interest rates in September. Related stories Non-farm employment is too strong! Fed sounding tube: The opportunity to cut interest rates in June is greatly reduced, Goldman Sachs and Barclays changed their words "to wait for July" US think tank spouted Trump Ball: Fed interest rate cut is too much, "inflation is about to explode", economics has completely failed Tariff storm to CPI unexpected decline, speculate whether the Fed rate cut can detonate the global asset carnival? Fed Kashkali: The inflationary impact of Trump tariffs is not a short-term phenomenon, and the Fed is not in a hurry to adjust interest rates" This article was first published in BlockTempo "Dynamic Trends - The Most Influential Blockchain News Media".