Minneapolis Fed President Kashkari: Tariffs will likely only have a one-time effect on inflation

Monetary Policy & Inflation - Minneapolis Fed President Neil Kashkari anticipates two more rate cuts from the central bank this year [1] - The Fed is concerned about potential erosion of belief in its commitment to the 2% inflation target [2] - Kashkari expresses confidence in bringing inflation back down to 2%, despite current elevated levels [4] - Tariffs have pushed inflation up, requiring policy adjustments to maintain a strong labor market [5] - Housing services inflation is steadily decreasing, and non-housing services inflation is slowly decreasing, tied to wage growth [6][7] - Core goods inflation, previously negative, has increased due to tariffs, with the impact expected to play out over a couple of years [7][8] Fed Independence & Market Signals - Widespread appreciation exists for Fed independence in maintaining low inflation expectations and defending the dollar [10] - Financial markets appear exuberant despite labor market slowdown signals, indicating policy may not be tight [17] - Labor market data shows signs of weakening, influencing the decision to cut rates, but the number of further cuts needed to reach neutral is uncertain [18][19] Interest Rates & Economic Impact - The neutral rate of interest may have increased, potentially limiting the impact of short-term policy moves on mortgage rates [14][15] - Despite concerns about national debt at $38 trillion, the 10-year yield at 41% is viewed positively [17]