Fed’s Kashkari Doesn’t Rule Out Rate Hike; Justin Trudeau, in a Deep Slump
Author: Greg Valliere
May 29, 2024
MINNEAPOLIS FED PRESIDENT Neel Kashkari said yesterday that he doesn’t rule out a Fed rate hike if inflation stays stubbornly high. He joins other Fed officials — including FOMC members — who have turned hawkish in recent weeks as the economy continues to grow solidly and prices stay elevated.
“I’M NOT RULING OUT potential interest rate increases from here,” he said. It may take “many more months of positive inflation data, I think, to give me confidence that it’s appropriate to dial back.”
KASHKARI ADDED THAT while a rate hike is unlikely any time soon, it’s “not off the table.”
FED POLICYMAKERS are expected to keep interest rates at a 23-year high when they next meet June 11-12 in Washington. A new report from April — the core PCE report — is due out this Friday, and economists expect the data to show some modest improvement.
WHILE THE ECONOMY IS GROWING, Kashkari pointed to an area where officials see potential problems — the commercial real estate market, which continues to slump badly. He expects “big losses” in the sector and said there will likely be surprises in where the losses take place.
OUR SENSE IS THAT rate cuts are unlikely until late in the second half, perhaps not beginning until two days after the Nov. 5 election, when the FOMC may finally move. As for rate hikes, they seem unlikely any time soon; a move to increase rates ahead of the election would put the Fed in an awkward spot, with Democrats howling.
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OUR FRIENDS IN CANADA may want to read an article in yesterday’s Politico titled: “If you think Biden has trouble, just look at Trudeau.”
THE ARTICLE paints a grim picture — Justin Trudeau’s terrible poll numbers, his weak support among young voters, the country’s persistent housing shortage and his likely challenge from firebrand Conservative Pierre Poilievre. Trudeau insists he won’t step down, but after three terms, he’s facing an uphill battle as voters call for a change.
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