Kashkari Offers Two-Sided Commentary

Minneapolis Fed’s Kashkari (’23 voter) offers slightly more two-sided commentary than his prior hawkish stance, questioning whether the Fed has done enough or needs to tighten some more:

• Paraphrasing" The economy has been very resilient. Right now inflation is coming down and we’ve made some good progress but it’s still too high. The good news is that the labor market has remained very strong but it’s a little bit of double-edged sword. The question in my mind is have we done enough to get inflation all the way back down to our 2% mark or do we have to do more.
• We look at a tremendous amount of data to try and get a read on the economy… and it’s often sending mixed signals."

Fed Funds implied rates have mostly stabilised after falling ahead of his remarks after the increase on stronger than expected retail sales was surprisingly reversed. They sit with cumulative hikes of +2.5bp for Sep and +9.5bp for Nov to the terminal, whilst cuts have built to 50bp from terminal to Jun'24 and 119bp from terminal to Dec'24.