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Fed’s Kashkari says he’s open to a pause in rate hikes in June

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Minneapolis Fed President Neel Kashkari says he’s open to pausing rate hikes at the Fed’s next meeting in order to buy time to assess the inflation outlook and the effects of more than a year of rate increases.

In a Friday interview with the Wall Street Journal that was published Sunday, Kashkari said he’s “open to the idea that we can move a little bit more slowly from here.”

But he stressed that doesn’t mean the Fed is done raising rates.

“I would object to any kind of declaration that we’re done. If the committee chooses to skip a meeting because we want to get more information, I could make the argument why that makes sense,” he told the Journal. “A skip to get more information is very different in my mind than [saying], ‘Hey, we think we’re done.’”

Kashkari said that while inflation is not falling as much as the Fed had hoped, “it is at least not getting worse.”

The Fed has raised its benchmark rate more than 5% over the past 14 months in an effort to drive down persistent inflation, and Fed Chair Jerome Powell said Friday that it will still take some time to get inflation back down to the central bank’s 2% goal.

Fed officials have floated the idea of a “skip” when they meet in June, and Powell has said no decision has yet been made.

“We can afford to look at the data and the evolving outlook and make careful assessments,” he said Friday.

Meanwhile, New York Fed President John Williams said Friday that the higher-rate environment does not mean a fundamental shift, and that era of ultra-low rates may return one day if the economy cooperates.

Financial markets are pricing in two 25-basis-point interest-rate cuts later this year, though the Fed has not indicated it is considering any cuts yet.

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