Federal Reserve's Kashkari: The economy is strong, but inflation has not been eliminated

"We need to get the job done," Kashkari said last Sunday on CBS's "Face the Nation." "We need to be confident that inflation will fall all the way back to the 2% target." The Federal Reserve lowered interest rates by 25 basis points last Thursday, marking the second consecutive rate cut by the Fed. Last Saturday, Kashkari stated that strong economic growth and higher productivity could lead policymakers to cut rates less than previously expected in the coming months. In September, officials anticipated another 25 basis point cut before the end of the year, and Kashkari reiterated this forecast last Sunday. He said, "There is definitely a possibility of another rate cut in December." President-elect Trump has promised to carry out mass deportations of illegal immigrants, raising questions about what impact this might have on the U.S. economy and labor market. Kashkari noted that deporting illegal immigrants could cause "disruption" to some U.S. businesses, and it remains unclear what effect the outflow of immigrant labor would have on inflation. The Minneapolis Fed president emphasized that it is still too early to determine how the incoming administration and the new Congress's potential policies will affect the economy and interest rate trajectory. Kashkari stated, "What the actual policies will be, what Congress will pass, how they will be implemented, all of this is highly uncertain. We can only wait. Before analyzing what this means for the economy, we must observe the decisions of other government departments." He indicated that if global trading partners retaliate, President-elect Trump's tariff proposals could exacerbate long-term inflation. He mentioned that one-time tariffs "should not have a long-term impact on inflation," but if a tit-for-tat situation arises where one country imposes tariffs and another responds, escalating continuously, then the challenges emerge, "it becomes more concerning, and frankly, the uncertainty increases." Trump and his supporters, such as billionaire and Tesla CEO Elon Musk, have openly expressed a desire for the president to have a say in the Fed's policy decisions, and he supports the idea of allowing the president to intervene in Fed policy. The Fed considers its political independence a core feature, allowing it to formulate monetary policy based solely on the health of the U.S. economy rather than electoral motives. However, Kashkari stated that he is not concerned about political factors infiltrating the Fed's decision-making. He said, "I believe we will continue to focus on our economic work. That is what we should be doing, and that is what we are doing."