Minneapolis Fed Signals Possible Pause on Interest Rate Cuts in 2026
The Federal Reserve may be approaching a major turning point on interest rates, according to new comments from Neel Kashkari, president of the Federal Reserve Bank of Minneapolis.
Speaking Monday on Squawk Box, Kashkari said the Fed is getting close to what economists call a “neutral” interest rate — a level that neither stimulates the economy nor slows it down. After several rate cuts in late 2025, he suggested it may soon be time to pause and wait for clearer signals.
“My guess is we’re pretty close to neutral right now,” Kashkari said, adding that policymakers need more data to determine whether inflation or the labor market will become the bigger concern going forward.
According to projections from the Fed’s December meeting, the current federal funds rate — set between 3.5% and 3.75% — sits only about half a percentage point below what officials estimate as neutral. That narrow gap explains why some Fed members are questioning whether additional rate cuts are still necessary.
The challenge now is balance. Inflation remains above the Fed’s 2% target, while job growth has cooled and unemployment has risen to 4.6%. Kashkari acknowledged that many economists expected the economy to slow much more over the past two years, but growth has remained surprisingly resilient. That, he said, raises doubts about how restrictive current policy really is.
At the same time, inflation continues to prove stubborn. The Fed’s preferred core inflation measure recently came in near 2.8%, and Kashkari warned that risks remain — especially from tariffs linked to former President Donald Trump’s trade policies. He noted that tariff-driven inflation can take years to fully work through the economy.
Kashkari’s comments carry extra weight because he is a voting member of the Federal Open Market Committee in 2026. His remarks suggest growing support for a pause in rate cuts rather than continued easing early in the year.
He also voiced support for Jerome Powell, whose term as Fed chair ends in May but whose role as a governor runs through 2028. Kashkari said he hopes Powell stays on, calling his leadership “excellent.”
For now, the Fed appears set to wait. With inflation still elevated, the labor market softening, and economic data slowly normalizing, the next rate move — if one comes at all — will depend on which risk becomes more urgent.
For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group. Contact us today for a tailored consultation, where our expert advice turns potential into profitable reality.
🔍 If you’re looking to get the best possible mortgage in the U.S. for Foreign Nationals and Americans, and want to run an auction between more than 3,000+ lenders, click here👇
Creative Financing – Nadlan Capital Financing for Foreign Nationals & Americans
Continue reading on our site:
#FederalReserve
#InterestRates
#InflationVsJobs
#MonetaryPolicy
#EconomicOutlook
Responses