MNI BRIEF: Fed's Kashkari Sees Modest Cuts In Coming Quarters

MNI (WASHINGTON) - Minneapolis Fed President Neel Kashkari on Monday said he expects a "modest" decrease in the central bank's policy rate in coming quarters, but added that if the labor market surprisingly weakens then he could see a quicker fall in interest rates. 

"Right now, I'm forecasting some more modest cuts over the next several coming quarters to get to something around neutral, but it's going to depend on the data," he said in Q&A in Chippewa Falls, Wisconsin. "Even after the 50 basis point cut, I still think my monetary policy is still putting our feet on the brakes of the economy." (See: MNI POLICY: Fed To Scale Back To 25BP As US Outlook Stays Rosy)

Kashkari said he has been surprised by how resilient the U.S. economy has been in the past couple of  years. "We've raised rates a lot, and the U.S. economy has basically absorbed them and still continue to perform quite well and the labor market has remained strong."

"The fact that the economy has been so resilient over the last couple of years tells me, at least right now, the neutral rate seems to be higher. But is it going to settle, or is it going to go back to something like before?" Kashkari said. "Time will tell."