Federal Reserve Bank of Minneapolis President Neel Kashkari said a slowing of the U.S. economy may make an interest-rate cut appropriate in the near term, and he still sees two cuts by year's end.
"The economy is slowing," Kashkari said Wednesday in an interview with CNBC. "In the near term it may become appropriate to start adjusting the federal funds rate," he said referring to the central bank's benchmark rate.
The Minneapolis Fed chief added that tariffs still represent a significant uncertainty and it's unclear what impact they'll have on inflation.
"How long can we wait until the tariff effects become clear? That's just weighing on me right now," Kashkari said. "If the best of all the options is we make some adjustments and then we have to pause, or even then we have to reverse course, that might be better than just sitting here on hold until we get clarity on tariffs."
He said he still expects two rate cuts by the end of the year, but added officials could cut fewer times if there are signs the inflationary effects from tariffs could be persistent.
Fed officials last week held rates steady for the fifth straight time. With inflation still above their 2% target, policymakers are hoping to get more clarity on the impact of tariffs before they meet again in September.
A weaker-than-expected jobs report, however, revealed significant slowing in hiring over the three months through July and called into question the Fed's wait-and-see approach.
