After the first wave of speeches following the interest rate cut, Federal Reserve officials: "A stronger economy" means "fewer rate cuts"!

Neel Kashkari, president of the Minneapolis Federal Reserve Bank, stated on Saturday that stronger economic performance could lead to the Federal Reserve lowering interest rates by less than expected.

This was Kashkari's first public statement following the recent interest rate cut by the Federal Reserve. In an interview with Fox News, he pointed out that it is still too early to determine whether Trump's policies will trigger inflation and whether this will consequently reduce the extent of interest rate cuts. The Federal Reserve needs to closely monitor the actual effects of policies and adjust monetary policy accordingly.

He stated that short-term policy changes, such as those from Congress and the new administration, have relatively little impact on the Federal Reserve's monetary policy; the long-term economic growth trend is the more important consideration.

"If the productivity level of the U.S. economy continues to improve in the future, then we may not implement significant interest rate cuts."

Expectations for a Pause in Rate Cuts Rise Amid Economic and Political Factors

This week, the Federal Reserve cut rates by 25 basis points as expected, marking the second consecutive rate cut this year. The Federal Reserve first cut rates in September, with market predictions at that time suggesting possible cuts of 25 basis points at the November and December meetings. Now, traders have reduced their bets on a rate cut next month and believe the overall extent of cuts in this cycle will be small.

On November 6, after Trump's "victory" announcement, Wall Street Journal reporter Nick Timiraos, known as the "new Federal Reserve correspondent," also stated that Trump's election will not currently affect the Federal Reserve's stance on monetary policy; if the Republican Party subsequently "sweeps" (winning both the House and Senate), the wording regarding "basic assumptions" may be revised at the December meeting.

Behind the expectation of pausing further rate cuts, economic and political factors are intertwined.

On one hand, the U.S. economy continues to maintain strong growth momentum, with inflation rising in September, but the cooling of the labor market is happening more slowly than previously expected; on the other hand, Trump's victory and the potential introduction of new policies also bring new inflation risks.

It is noteworthy that U.S. productivity has rebounded in recent years, meaning workers can produce more products with less input, which helps control inflation and is key to long-term economic growth.

Earlier this week, Powell made it clear that even if President Trump asked him to resign, he would refuse, demonstrating the Federal Reserve's determination to defend its independence.

Kashkari also stated that the structural design of the Federal Reserve, such as the long terms of the Washington Board and the independent appointments of various reserve bank presidents, helps ensure the central bank's independence.

He believes that the majority of leaders from both parties hope for a decline in inflation and a strong labor market.

"So I am not worried about the current situation."