Fed's Kashkari (2026 Voter) says the economy is confusing and job market is showing signs of weakness; inflation is still too high but moving in the right way

Kashkari's remarks highlight a nuanced view of the economy, suggesting resilience despite underlying job market weaknesses and persistent inflation concerns.

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Fed's Kashkari (2026 Voter) says the economy is confusing and job market is showing signs of weakness; inflation is still too high but moving in the right way

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  • Overall, the economy seems quite resilient.
  • Economy has not slowed as much as expected, describes it as K-shaped.
  • Wonders how tight monetary policy actually is.
  • Has seen less tariff pass through than expected.
  • Tariffs haven't been gut punch many feared, but long term story still playing out.
  • 2% inflation remains target, remains committed to getting that level.
  • Does not expect inflation to surge again.
  • Current Fed balance sheet expansion is not QE.
  • Sees pretty good growth, does not see need for Fed QE.
  • Biggest barrier to housing market is supply.
  • Declines to comment on Trump administration buying mortgage bonds.
  • Job and inflation goals are in tension.
  • Welcomes recent decline in unemployment rate.
  • Is not sure what the current breakeven rate is for the job market.
  • Will take a few more months for government data to recover from the shutdown impact.
  • Feels pretty confident job market is moving sideways and inflation is easing.
  • Households have pretty good balance sheets.
  • Inflation has been the main driver thus far of financial distress.
  • Hasn't seen anything very alarming in consumer borrowing yet.
Context

His acknowledgment of a K-shaped recovery and the tension between job and inflation goals indicates potential challenges ahead for monetary policy, particularly regarding interest rates and growth expectations. This could imply a more cautious Fed approach, as markets may reassess rate path probabilities in light of his insights.

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