Minneapolis Fed President Kashkari said on Monday that the overall risk balance slightly tilts towards headwinds in the labor market, meaning that the unemployment rate may rise, while progress continues to be made in fighting inflation. This is similar to the previous statement made by the Chicago Fed President.
Last Friday, after the release of the bright non-farm employment data in the usa, Federal Reserve officials gave speeches successively. However, overall, they are cautious about the labor market and more optimistic about cooling inflation.
The US Bureau of Labor Statistics report shows that US employment increased by 0.254 million people in September, significantly exceeding expectations, marking the largest increase since March of this year. The unexpected drop in the unemployment rate to 4.1%, along with wage increases both year-on-year and month-on-month higher than expected, alleviated concerns about the worsening US labor market.
Minneapolis Federal Reserve President Kashkari said on Monday that the overall risk balance slightly leans towards headwinds for the labor market, meaning that the unemployment rate may rise, while progress in combating inflation continues.
Kashkari believes that the US labor market remains strong. The Federal Reserve hopes to maintain this state, and rate cuts are also aimed at maintaining the momentum of the labor market.
Kashkari also mentioned that he has not seen signs of reigniting inflation. The decline in new rental inflation gives him confidence that housing inflation in the next 12-24 months will decrease. The Federal Reserve is very confident in inflation returning to the 2% target.
Overall, Kashkari pointed out that the US economy is resilient.
Kashkari revealed that in the September release of the Summary of Economic Projections (SEP), he expects the neutral interest rate to be around 3%. However, he admitted that the level of the neutral interest rate faces significant uncertainty.
Kashkari's cautious attitude towards the US labor market is similar to the previous remarks of Chicago Fed Chairman Goolsbee. He stated that the September non-farm employment data was very impressive, but warned against relying too much on single-month data, also stating that this would not change the trend of interest rate cuts in the next 12 to 18 months. Goolsbee also added that inflation may be lower than the Federal Reserve's 2% target, this risk exists.
The statements of Federal Reserve officials have a certain deviation from the market. After the release of non-farm employment data significantly exceeding expectations, the discussion on 'no more rate cuts this year' has entered Wall Street, with some industry insiders pointing out that US inflation has been overlooked and inflation is still alive.
Editor/rice