Minneapolis Fed’s Kashkari opposed October rate cut, undecided on December

Investing.com -- Federal Reserve Bank of Minneapolis President Neel Kashkari revealed he did not support the U.S. central bank’s most recent interest rate cut, citing economic resilience that exceeded his expectations.

"The anecdotal evidence and the data we got just implied to me underlying resilience in economic activity, more than I had expected," Kashkari said Thursday in an interview with Bloomberg News. This resilience, he explained, justified a pause in rate cuts during the Fed’s October meeting.

Kashkari noted that economic data since the October meeting has shown "more of the same." Regarding the upcoming December 9-10 rate decision, he stated, "I can make a case depending on how the data goes to cut, I can make a case to hold, and we’ll have to see."

While Kashkari does not hold a voting position on rate decisions this year, he participates in the Federal Open Market Committee’s deliberations.

Market investors have reduced expectations for a December rate cut to approximately 50-50 following statements from several Fed officials suggesting a third reduction may not be necessary after the consecutive cuts in September and October.

After the September decision, Kashkari had anticipated two additional cuts in 2025. He explained Thursday that at that time, he believed the economy was slowing more significantly.

Kashkari observed contrasting economic signals, noting, "There are a lot of headlines about low-income borrowers — sub-prime borrowers, sub-prime companies that serve sub-prime markets — getting into trouble, so it seems like there’s real pockets of weakness in the labor market." However, he added, "At the same time, a lot of corporate earnings are doing fine, and a lot of corporations are very optimistic about 2026."

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