Fed's Kashkari says it's 'reasonable' to predict a December rate cut

Minneapolis Federal Reserve President Neel Kashkari on Sunday said it's a "reasonable prediction" that the U.S. central bank will cut interest rates once this year, waiting until December to do it.

"We need to see more evidence to convince us that inflation is well on our way back down to 2%," Kashkari said in an interview with CBS' "Face the Nation" program.

The Fed last week held its benchmark policy rate in the 5.25%-5.50% range, where it has been since last July, to keep continued pressure on the economy so as to cool inflation. It also published projections that showed the median forecast from all 19 U.S. central bankers was for a single interest rate cut this year.

"We're in a very good position right now to take our time, get more inflation data, get more data on the economy, on the labor market, before we have to make any decisions," Kashkari said. "We're in a strong position, but if you just said there's going to be one cut, which is what the median indicated, that would likely be toward the end of the year."

Kashkari, who has been more cautious about the possibility of easing monetary policy than many of his colleagues, did not say how many rate cuts he personally expects.

He said he has been surprised by how well the U.S. job market has performed even as the Fed raised borrowing costs aggressively in 2022 and 2023, but that he expects more cooling ahead.

"I hope it's modest cooling, and then we can get back down to more of a balanced economy," he said.

Inflation by the Fed's targeted measure, the year-over-year change in the personal consumption expenditures price index, registered 2.7% in April. The Fed has a 2% target.

The unemployment rate in May ticked up to 4%, the highest since just before the Fed launched its