Watch CNBC's full interview with Minneapolis Fed President Neel Kashkari

Core Viewpoint - Minneapolis Fed President Neil Kashkari anticipates two more rate cuts from the central bank this year, despite concerns about inflation and the Fed's commitment to its 2% target [1][17]. Summary by Relevant Sections Rate Cuts and Inflation - Kashkari expresses confidence in the need for two additional rate cuts this year, suggesting that the current funds rate is above neutral given a 3% inflation rate [17][18]. - He acknowledges the challenge of cutting rates while inflation remains elevated, emphasizing the importance of communicating the rationale behind these decisions to the public [2][3]. Inflation Dynamics - The essay highlights that housing services inflation is on a steady decline, and non-housing services inflation is also gradually decreasing, linked to wage growth trends [6][7]. - Core goods inflation had turned negative earlier in the year but has since increased due to tariffs, which Kashkari believes may have a one-time effect rather than a persistent impact [7][8]. Fed Independence and Market Reactions - Kashkari discusses the importance of Fed independence in maintaining low inflation expectations and the dollar's value, noting that market participants generally trust that this independence will be upheld [10][11]. - Despite concerns about potential erosion of Fed independence, he observes that the bond market does not currently reflect these worries, indicating confidence in institutional stability [9][10]. Labor Market Insights - The labor market shows signs of fragility, with businesses cautious about hiring and firing, which could necessitate rate cuts as a form of insurance to prevent a significant downturn [24][25]. - Kashkari mentions that estimates for job growth needed to maintain a stable unemployment rate are around 50,000 to 80,000, suggesting a cautious outlook on labor market dynamics [22][23]. Economic Forecasting and Policy Response - The Fed is focused on forward-looking indicators, with confidence that inflation will continue to decline as housing inflation decreases and tariff rates stabilize [19][20]. - Kashkari expresses skepticism about the immediate impact of fiscal policies, such as tax cuts, on economic growth, emphasizing the need for cautious forecasting [26][28]. Technological Impact on Labor Market - The potential effects of AI on the labor market are acknowledged, but Kashkari believes these changes will unfold gradually, similar to past technological advancements [32][33].