Minneapolis Fed pres. Kashkari calls for steady rates

00:00 Speaker A

Investors are digesting new comments from the Fed amid further uncertainty around President Trump’s tariff policies. Here with more, we’ve got Yahoo Finance Fed correspondent, Jennifer Schonberger. Hey, Jennifer.

00:11 Jennifer Schonberger

Good morning, Brad. Minneapolis Fed President, Neel Kashkari, calling for holding rates steady this morning, as he awaits the impact of higher tariffs on inflation, and to guard against longer-term inflation expectations from heading higher. In a speech in Tokyo, this morning, Kashkari warned against looking through the inflationary impact of new tariffs. As he noted, there is a healthy debate within the Fed right now about whether the impact on inflation from tariffs will prove longer lasting. Kashkari made the argument, it may take months, or years, for trade negotiations to conclude, warning there could be tit for tat tariff increases. He also stressed that some tariffs apply to parts used to make final products, and that it’s going to take time for full effects of those price increases to pass through to final prices. Now, this week we will also hear from Fed governor Adriana Kugler, as well as Richmond Fed President, Tom Barkin, Chicago’s Austin Goolsbee, and San Francisco’s Mary Daly. We will also get the Fed minutes out, on Wednesday, so a very busy week of Fed speak. Yes.

01:57 Speaker A

Yeah, and in addition to the Fed minutes, there’s a lot of data out this week for the Fed to decipher, as well. So, what are they gonna be prioritizing here, Jen?

02:11 Jennifer Schonberger

Yeah, that’s right, Julie. Uh, the Fed is gonna be getting a fresh reading on their preferred inflation gauge, that core personal consumption expenditures index. That will be for the month of April. And guys, recall in April, that’s when we really saw the tariffs kick in full blast. The president announcing those reciprocal tariffs on April 2nd, only to pause them for 90 days. However, he retained that 10% blanketed tariff on all goods coming into the US, so that will be in full force, along with the steel and aluminum tariffs, and he retained tariffs on China, even ratcheting them up, recall, about 145%. And still, even with all of that, economists expect core PCE to actually drop a tenth of a percent, to 2.5% from 2.6% in March. So, we’ll see how that data actually shakes out. We’re also gonna get a second reading on first quarter GDP, which surprisingly contracted by three tenths of a percentage point. Economists still expecting a slight contraction though, uh, in that second reading, and we will also be getting some fresh readings on consumer sentiment, the first of which coming out in just the next couple of minutes.

04:02 Speaker A

All right, Jennifer, thanks so much.

04:06 Jennifer Schonberger

Thanks.