Minneapolis Federal Reserve President Kashkari pointed out in an article that he supported the significant interest rate cut by the Fed last week and supported another 50 basis points cut before the end of the year.

In an article published on its banking website on Monday, Cashkali pointed out that inflation has cooled significantly, approaching the Fed's 2% target. He wrote that at the same time, there are signs of labor market weakness emerging.

"The risk balance has shifted from higher inflation to further softening risks in the labor market, making it necessary to lower the federal funds rate," Cashkali wrote.

His remarks were made after last week's decision by the Federal Reserve policymakers to cut interest rates by 50 basis points, marking a shift from fighting inflation to supporting the labor market. The median forecast released by Federal Reserve officials last week is that interest rates will be cut by another 50 basis points in the remaining two meetings this year.

Even though Cashkali is not a member of the Federal Open Market Committee (FOMC) this year,The Federal Open Market Committee (FOMC)but he participated in the discussions on monetary policy.

On September 20, Federal Reserve Board member Waller stated that unexpectedly favorable inflation data in recent weeks prompted him to support a 50 basis point rate cut.

This contrasts with Director Bowman, who last Friday stated that she voted against this decision because she remains concerned about inflation exceeding the target level. Bowman became the first Federal Reserve Board member to vote against interest rate action since 2005.

Kashkari stated that despite the uncertainty surrounding the potential strength of the US economy, growth and consumer spending remain robust. He also mentioned that the neutral interest rate of the Fed, which neither restrains nor stimulates the economy, may have increased.

Kashkari wrote, "The longer this economic resilience continues, the more I believe that the temporary increase in the neutral interest rate may actually be more structural."

He expects the long-term federal funds rate to be around 2.9%, higher than his forecast of 2.5% in March. All Federal Reserve officials have also raised their median estimate of this rate. The "dot plot" released last week shows that officials' estimated neutral rate has increased from 2.5% a year ago to 2.9%.

Since 2022, when the Federal Reserve began actively tightening policy to curb inflation, Kashkari has published a series of articles. In a previous article written in May, Kashkari mentioned that policymakers may keep interest rates at current levels "for a while" until they are convinced that inflation is moving toward their target.

Atlanta Fed President Bostic also stated on Monday that the Fed's easing cycle, starting with significant rate cuts, will help bring rates closer to neutral levels, as the risks between inflation and employment become more balanced.