Minneapolis Fed President Says Hassett's Remarks Are an Attempt to Undermine Fed Independence

"We Must Guard Against an Inflation Rebound"
"Depending on the Data, a Rate Cut in the Second Half Is Possible"

Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, criticized Kevin Hassett, Director of the White House National Economic Council (NEC), saying he was attempting to undermine the independence of the Federal Reserve (Fed).

Appearing as a panelist at the Midwest Economic Outlook Summit on the 19th (local time), Kashkari referred to Hassett's recent remarks as "another attempt to compromise the Fed's independence," adding, "Over the past year, we have witnessed several attempts to interfere with the Fed's independence."

The previous day, in an interview with CNBC, Hassett had slammed a New York Fed tariff report, which pointed out that U.S. companies and consumers are bearing most of the tariff burden, calling it "shameful" and "the worst paper in the Fed's history, and those involved should rightly be disciplined," thereby putting pressure on the authors.

Kashkari expressed concern that calls to discipline researchers simply because their findings differ from the administration's position could undermine the objectivity of the central bank. He went on to stress, "The louder the political noise becomes, the more we will focus on our core work."

As for current monetary policy, Kashkari said it "seems to be almost at a neutral level," and warned that "if we cut rates too much, we must be wary of the risk that inflation could rebound." However, he added that if the data support it, rate cuts could be considered in the second half of this year.

On the labor market, Kashkari assessed that it remains solid but has moved away from its previous overheated state and is gradually moving toward balance. He noted that the gap between job openings and job seekers is narrowing, and judged that this is helping to stabilize wage growth and reduce inflationary pressures.

Regarding inflation, he said, "It is very encouraging that inflation is coming down without a sharp deterioration in the labor market," but added, "We still need to watch the data for the next few months to be confident that we have reached the Fed's 2% target."