Fed’s Kashkari Says Quiet Part Out Loud: Maybe No Rate Cuts in 2024 if Inflation Continues to Move “Sideways”

The stock market didn’t like that at all.

By Wolf Richter for WOLF STREET.

It was Minneapolis Fed President Neel Kashkari’s job today to say out loud what we’ve said here at WOLF STREET in the comments for a while, and what others have said, and what other Fed officials have gotten close to saying with their wait-and-see and in-no-rush lingo, but haven’t yet said:

“If we continue to see inflation moving sideways, then that would make me question whether we need to do those rate cuts at all,” he said in an interview with Pensions and Investments Magazine. “There’s a lot of momentum in the economy right now.”

If the economy continues to grow as it has, powered by consumer spending, it also raises the question “of why cut rates,” he said.

And more rate hikes are “not off the table, but they are also not a likely scenario given what we know right now,” he said.

“The question is, is inflation going to continue to fall, and/or is it going to be monetary policy’s job to bring inflation all the way back to the 2% target right now,” he said.

Kashkari is not in a voting slot this year on the policy setting FOMC, so he’s sort of a soft voice to put the bug into your ear, the voice to gently get the thought process going.

He said he still “jotted down two rate cuts” for 2024 – a reference to the “dot plot” at the March FOMC meeting where the 19 members wrote down their vision for interest rates. Of the 19 members, 9 saw two cuts or fewer in 2024, 9 saw three cuts, and 1 saw four cuts. So the “median,” cited in the headlines, was still three cuts, but if only one member that saw three cuts switches to two cuts, the median drops to two cuts, as we discussed at the time.

So he was one of the nine FOMC members who saw two or fewer rate cuts by the end of 2024.

The Fed’s models of the economy “are not describing the inflationary dynamics that we’re seeing right now,” he said.

He also pointed out that there was a lot of uncertainty in the economy, and that it has been difficult for forecast.

Inflation fell sharply in the first nine months of 2023, driven by the collapse of energy prices and a drop from the pandemic spike of durable goods prices as the supply-chain bottle necks were sorted out, but toward the end of the year, the underlying measures turned around and started accelerating again, particularly services, and then we had two awful inflation readings in a row for January and February — that were “a little bit concerning,” Kashkari said.

He said he needed more confidence that inflation is moving toward the 2% target before cutting rates, and emphasized that the coming inflation would guide interest-rate decisions, something that every Fed official has emphasized: the rate decisions would be data dependent.

So, to use Kashkari’s term of “sideways”: inflation hasn’t really moved “sideways” in recent months, it re-accelerated. And that has spooked lots of people. Obviously, that could have been just a temporary bump in the road, or it could have been more than that, as Powell pointed out during the press conference, and no one knows.

But what the Fed officials have been doing for two months is slowly and systematically dialing back the rate-cut expectations, and Kashkari just turned the dial a little further.

The stock market didn’t like this at all. When this no-rate-cut scenario started spreading in the afternoon, stocks began to head south, and the S&P 500 ended down 1.2% for the day. But I mean, anything – a butterfly batting its wings – could have deflated the sentiment in the market after this crazy rally.

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  107 comments for “Fed’s Kashkari Says Quiet Part Out Loud: Maybe No Rate Cuts in 2024 if Inflation Continues to Move “Sideways”

  1. The Struggler says:

    The Fed’s always late:

    Why change the rate?

    • GuessWhat says:

      With his sideways comment, one REALLY has to wonder about his credibility. And, the Fed’s models of the economy “are not describing the inflationary dynamics that we’re seeing right no.”

      Mr. Kaskkari, does the Fed economic model event try to explain what $2.12T in deficit spending this FY is doing to inflation & the labor market?

      Sideways means no change. We could easily be in the 3rd inning of what’s going to be at least 9 innings of gradual to potentially moderate increases in inflation.

      Sideways. Did he really say sideways? My goodness. Thank goodness is not voting this time around.

      • dang says:

        Yes, they do. The labor market seems to be robust. Sideways seems to be the generally accepted central bank’s directive from it’s private owners.

        There is in my mind the concept that the first wave of inflation is always asset inflation.

        General inflation is the cost of sustaining the asset price bubble.

    • Sacramento says:

      Children are running the Federal Reserve .

      It’s impossible to not feel bitterness as the price of groceries spirals out of control

      • dang says:

        I think that the children running the Federal Reserve Bank of the United States of America, sometimes wish their inclination was as simple as it was once was.

        Higher prices are the cost of higher asset prices. The maliable Fed, willing to pay potential criminals of the greatest organized fraud in the history of mankind to which I’m referring to the so called GFC when the crooks went bankrupt and the Fed covered their losses.

        That is who the Fed is.

      • Coil says:

        Price of groceries is not out of control, that’s histrionic nonsense.

        • 91B20 1stCav (AUS) says:

          …the ability/capacity of the spacecraft to generate/supply life-support stores for its highly-burgeoned crew is not an entitlement to, or guaranty of the same (…another conundrum of our often-confused conflation of ‘human nature’/ ‘human rights’ in dictating the processes of a physical world that has long ante-, and doubtless will post-date us…i.e.: ‘Nature’ will ALWAYS bat last, and not necessarily look like us…).

          may we all find a better day.

  2. Steelers Fan says:

    That’s why I love this site Instead of having a case of FOMO I read your articles and stay calm. I always feel like you are anead of the curve Mr Richter.

    • Debt-Free-Bubba says:

      Howdy Steelers Fan. Follow the dots. I learned about them here. Lone Wolf was only place I found to point out the dot difference between Dec and March dots……

    • Rob says:

      Well. You would need a month of moves like today to reverse the mania driven rallies. One day means nothing, zero. Lucky the ones who can feast on the breadcrumbs and be happy, though.

      • grimp says:

        This week has been a shaky market. You’re right though, we could see a 1000 pt rally tomorrow.

        • Thunder says:

          On what ? I look at Germany and see the DAX 18,000 + knowing full well they are in a recession and just shake my head at the ludicrous index along with the other failing states of the EU, all indexes at record prices.
          Something is not as it seems even accounting for rampant inflation in the region

        • Stillastudent says:

          As Wolf says,”Nothing moves in straight lines”. (Or some such). Yes, it could rally against all sorts of bad news until the irrationally exuberant are flushed out.

  3. XLOVELI says:

    I believe men have come to expect too much of their government, as if it could always and magically control inflation, recessions, and anything else bad that comes up. A lot of this is just the natural workings of the economy. After an extended period of 2% inflation perhaps there was a pent-up pressure to raise prices. It might not have just been greedflation.

    The point is, governments aren’t a fairy godmother that can grant your every wish. Due to their tremendous financial and regulatory power, they can do a lot, but not everything. We’ve got to get out of this Keynesian cycle of seeing everything as fixable with just a little meddling, and let the market work out some of its kinks on its own.

    • Glen says:

      I’m no expert on the subject but besides being concerned the market will just work itself out we also would need to free in other areas(tariffs, bans, etc.). Meddling is needed to some degree given people will have to work for whatever businesses will give them and of course could have much more significant downturns.
      Perhaps just more liquidity needs to be drained out and of course at some point government spending or revenues or a combination of them will have to be addressed.

      • Home toad says:

        You sound like an expert in all things to me, what you don’t know you cover nicely with Bearnaise sauce.
        The sideways comment by kashkari is a bit odd, but it’s a line I might steal, such as, “cook my steak sideways”.

        • Glen says:

          Not sure how to take the French sauce comment but my only point was that free market, or deregulation has shown to be dangerous. For reasons I can’t align with reality, people believe free markets eliminate the possibility of monopolies. Government is ideally supposed to protect us from those who control the industries and capital. That said, my degrees are in business and computers and not economic theory. Sometimes though I think economists invented a tricky language to explain fairly simple concepts, perhaps for job security.

        • MM says:

          “For reasons I can’t align with reality, people believe free markets eliminate the possibility of monopolies. Government is ideally supposed to protect us from those who control the industries and capital.”

          But government is, by definition, a monopoly.

        • John H. says:


          “But government is, by definition, a monopoly.”

          Good point.

          The power to coerce takes many forms, and governments (and agencies) are deigned to control.

        • John H. says:


          “Designed to control”

      • 91B20 1stCav (AUS) says:

        …questions struggled with for well over a century, with massive attendant costs in blood and treasure. Again highly-recommend Tuchman’s ‘The Proud Tower’, her examination of the late 19th Century West as additional background to situations we find in the present day…

        may we all find a better one.

    • Bobber says:

      You should be addressing that comment to the Fed Reserve, not the public. The public wants a free market, generally. Fed Reserve does not, based on its actions and heavy interventions.

      • Glen says:

        I keep hearing free market in the comments. Can somebody define that? I can’t assume it is allowing the market to resolve all conflicts and not having any government regulations or interventions. That might suggest we don’t need minimum wage, for example, since the natural laws of supply and demand set those levels. Our country has had a lot of controls in our history such as price and wage controls dating way back. I certainly don’t represent the public that wants to trust free market forces, mainly because the levers of power is unequal relative to labor and owners of production. I also like regulations that, for example, might eventually address climate change.

        • jr says:

          I would say there is a difference between regulating the markets and manipulating the markets. Just as there is a difference between having an opinion and having an agenda.

        • ChS says:

          Minimum wage is an interesting example because the market has in fact allowed wages to adjust above minimum wage in many locations. Makes me think that if we had a government mandated wage instead, many workers would be making a lot less money.

        • Glen says:

          Yes, but the purpose of a minimum wage is to avoid exploitation. Very few people work at even the Federal minimum wage in the US (1.2%).
          Admittedly this just caused business to exploit overseas labor paying unlivable wages in sweatshop conditions. Minimum monthly pay in Cambodian garment sector has risen to be $204 a month but when I was there just a decade ago it was $60 or so with probationary period. The power of labor but of course there will be very little return of most manufacturing unless subsidized heavily via some mechanism. No irony in that the US imported cheap labor early in our history and now because of globalization can just chase the cheapest labor pool.

        • ChS says:

          I agree on the exploitation of labor issue. From Bangladesh to Vietnam, or in China exploiting it’s own work force. Sort of the unfortunate way of it throughout history. We likely agree on a lot of the issues, just not the solution.

          The US exported a lot of its polluting industry to China to the detriment of our own factory workers and to the detriment of the global environment due to lax environmental laws in China.

          Also, lots of parallels in the migration issue covered in Wolf’s previous article. The US needs to consider the various imbalances in the world when exporting industries or importing people who are easily exploited.

          But inside it’s boundaries, the US government needs to get out of the way.

        • BP says:

          The discussion needs to remain on the topic of bailouts, not minimum wage. The problem is at the top, stop punching down.

        • John H. says:

          A sonnet on the everlasting tension between freedom and law”

          Freedom’s what’s inside the fence,
          Of Morals, Money, Law, and Sense,

          And we are free if this is wide,
          (Or nothing’s on the other side).

          We come to Politics (and Sin),
          When Your fine freedoms fence Me in,

          And so through Law we come to be,
          Curtailing Freedom — to be free.

          — Kenneth Boulding, Principles of Economic Policy, 1958

    • Escierto says:

      Come on, central planning worked out so well for the Soviet Union. Our commissars can do just as good a job as they did.

    • Einhal says:

      That’s because the last 50-60 years of general prosperity in the West has led people to become complacent. Government is seen as a panacea to every problem.

      The problem is that government cannot fix most problems without creating others. The last 20 years has been demonstrative of that.

    • AuHound says:

      Keynesian cycle? If it was a real Keynesian cycle then we should be seeing a balanced budget!

      • Nick Kelly says:

        Yes. Keynes wanted gov spending in downturns to be paid back by running a SURPLUS in the good times. This would dampen swings in both directions. His impetus was the Great Depression in which the medium of exchange, aka money. disappeared, while the gov kept tightening and the Fed did nothing.

        It is no surprise that the vast majority of commenters don’t know this. What is surprising is that David Stockman apparently doesn’t. He should reread a great book: ‘The Triumph of Politics’, which is all about how the urge to hand out goodies and get elected abused Keynes principle and just spent all the time.

        And by the way David, the threads in a garment running at right angles are the warp and the weft, not the warp and the ‘woof’.

    • Timothy Francis says:

      You are quite right, the actual problem lies with the well-hidden group of people who are known as the THEYS. We often call on them for many reasons, THEY must, THEY could, THEY should, THEY didn’t, THEY did… on and on. Possibly the are a secretive, all-powerful organisation in a very secret part of the Pentagon? Fort Knox? The United Nations? Maybe Wolf has met some of them, or knows who they are??? Regrettably THEY are far removed from any lobbying, although called on by so many.

      • 91B20 1stCav (AUS) says:

        “…we have met the enemy, and he is us…”

        -the late, great, Walt Kelley’s character: ‘Pogo’

        may we all find a better day.

    • WB says:

      Correct! HOWEVER, governments should also NOT MAKE THINGS WORSE! We the people no longer have any representation in this republic.

      The response to the “Great Financial Fraud” (we all know it wasn’t a “crisis”) was 100% wrong. The siphoning of wealth from the bottom to the top at an exponential rate…

      Rime to reap what has been sown.

  4. SoCalBeachDude says:

    Nice to have it further confirmed that the Federal Reserve certainly isn’t going to pivot. Even better to know New York got the memo!

  5. John says:

    Action speaks louder than words! The Fed inaction also speaks louder than words, to me anyway. The cuts story is getting redundant. Bostic started most of the talk with the cuts earlier last year, now he mentions one cut later this year. Kashkari speaks possibly no cuts and the market hates it. Oil hits 90 a barrel. Gasoline is up 47 cents a gallon, and Biden wants to control that!, again. Fight for free markets! Thank you Wolf.

    • Glen says:

      All for free markets. Let’s get BYD EVs here without tariffs! Wait, what happens to employment without protectionism? The global economy requires various government interventions.

  6. dishonest says:

    Kashkari had better sleep with one eye open and get a food taster to sample his victuals while at table. Wall Street/Big Business is not gonna like his message. Big Business, Mafia= not much difference in mentality.
    Ya don’t wanna cross these dudes.

    Just sayin.

    • Rob says:

      Cheap money junkies. Scam of the earth. I’m puking thinking about this lot.

      • Nick Kelly says:

        Which lot? The Fed didn’t spend the money. Congress did. No matter which party controlled it. So figure out who you and the other torch bearers want to crucify. If it’s who likes free stuff from gov,,,it’s everyone.

  7. HR01 says:


    Many thanks.

    Amusing to read these comments coming from “Cash carry” since he’s been an uber dove.

    Just wait until the language from Fed officials shifts (perhaps by summer) from “further hikes unlikely” to “FF hikes ahead”.

    The equities market does not surprise. The real bubble remains in the bond market…longer-duration Treasuries, IG corporate, junk, muni’s, etc. Serious upheaval arrives when bondholders finally see the risk unfolding and sell first, ask questions later.

    • MM says:

      I agree long maturities will re-rate down when long yields eventually rise… corp bond spreads are still very tight 10+ years out. But at the shorter end, the pull to par will keep prices contained while newly issued debt is at progressively higher rates.

    • KPL says:

      “Just wait until the language from Fed officials shifts (perhaps by summer) from “further hikes unlikely” to “FF hikes ahead”.

      That might be too much to ask of the Fed. They just do not like to disturb stock market’s north bound journey too much. Like today they would allow some gas out of the bag. But you can bet your last penny Williams or someone will start yapping away soon if it drops more than 5%.

      Not a bad idea to take them one by one to the back of the woodshed.

  8. Debt-Free-Bubba says:

    Howdy Folks. The youngins think Interest Rates above 5 % are high interest rates. Don t be ZIRPed to stupidity. Always save a few bucks too…
    YOU can become a sober or drunk sailor if you do……..

    • phleep says:

      Bubba, I’m in your club! Been living like a church mouse. My house will be paid off in 3 months. My total debt is 0.24% of my assets. I LOVE to sleep well!

      • Debt-Free-Bubba says:

        Howdy phleep. Living within your means is real freedom.

        • Geo says:

          Yes, until your local town board hits you with unexpected infrastructure costs like water, sewage, and road/bridge work. Plus, higher school and property taxes. There is nowhere to hide.

  9. Markymark says:

    Exactly what happens in an economy if the fed cuts rates into an inflationary cycle por favor?

    • Gen Z says:

      Asset bubbles to the moon. Cash considered worthless because $1 can’t buy as much as it used to, and interest rates can’t beat inflation.

      Cheaper to get loans to buy stonks, bitcorn ETFs when 10 years ago Bitcorn was vilified as a tool that nefarious people use, cheaper mortgages means higher house prices.

      • Glen says:

        Wage gains need to keep equal or ahead to outpace inflation. Interest rates assumes most people have enough extra to invest and while probably true for most on this thread still many living paycheck to paycheck.
        Fortunately $1 can still buy you 20 nickels.

    • Debt-Free-Bubba says:

      Howdy Markymark, they did it before. They have the Greenspan FED tool also……

  10. elbowwilham says:

    Many are blaming what is happening in the Middle East for todays market drop and oils surge. Is that really new? But maybe it was just a butterfly.

    • phleep says:

      Markets shrug off the strangest things. When I was trying to time them, I got my pricey lessons! It is easy to thrill at the gains while ignoring the losses — until one’s pain point is reached.

  11. grimp says:

    Does this qualify as a Rug Pull?

    • Wolf Richter says:

      I think a 10% drop following something like this might qualify as a rug pull. A 1% drop is just barely noticeable.

    • Jon says:

      A small 1 percent drop wirh such a big run in last few months is absolutely nothing.

      Even a normal healthy correction is 10 percent or so .

      Even with a healthy correction.. this would still qualify as awesome bull run.

  12. Seba says:

    Very timely Mr. Richter, was wondering what was up. I’m still wondering why the “higher for longer” needs to be the “quiet part” though. What’s the purpose of that? Keep markets calm and pumping on false hopes of multiple rate cuts very soon? I mean eventually cat’s gotta come out of the bag anyway, and if and when that happens it could be a more painful drop no?

    Anyway, thank you for reporting things as they are, this blog keeps me sane when things happen in the markets.

    • Einhal says:

      My thought has been that they’re still basically acknowledging at least ONE rate cut this year to shut the Wall Street whiners up. They figure, “Ehh, 5.5% to 5.25% isn’t that remarkable, so if it’ll quiet the demands for rate cuts, that’s all the better.”

      The problem is that they’re too stupid to realize that it’ll never end at 5.25%. If 5.5% is too high and they “need” a cut, then they’ll be back demanding more, back until rates are 0.

      That’s why this strategy of jawboning is so stupid.

  13. duane says:

    When KISS can sell their music catalog for $300m, “baby, baby, that’s quite a lot” and inflation is still a problem.

  14. john says:

    Seems like Kashkari finally looked in the mirror and is coming around. I don’t think he can take any more cuts even a 1/16 of a shave might be too much for his head.

    Unless of course they are plotting the chart for how many cuts Powell can do in 2024. Powell might be able to do 2 cuts this year before its too close for his hair too.

  15. R2D2 says:

    Wish the Fed and Wall Street wouldn’t work off backward-looking inflation data.

    In this day and Internet age, real-time inflation data is widely available.

    The real-time daily inflation data today is showing US inflation falling sharply in the past 7 days, from 2.30% to 1.95%.

    The US is back under the 2% level in April.

    • Herpderp says:

      lol, lmao even

    • Wisdom Seeker 2.0 says:

      Real time data for what, exactly? Rents are about 1/3 of CPI, and there is no real-time inflation data for rents that I’m aware of. Ditto healthcare at around 14% of GDP though under-weighted in CPI. Absent those and a few others, “real time data” cannot measure even half of what goes into CPI.

      Anyway, 7 days is noise and without seasonal, weather, holiday-sales and other adjustments is beyond meaningless.

    • NYGuy says:

      All inflation data is by definition backward looking, unless you expect them to have a crystal ball. Your “real-time” data is worthless given the rise in oil, gas, gold, silver, copper, steel, cocoa, and many other metal and ag commodities not to mention insurance, travel, and labor costs over that very same 7 days.

      But I cant expect much from a clumsy robot, can I?

    • MM says:

      Real-time data is still too old. The Fed needs to hire the Precogs from that movie Minority Report and use their future-predicting abilities to set policy.

    • Ciprian Gal says:

      And the fed swaps in May just priced a slight increase if probability in one rate cuts in May (since yesterday). This is a forward indicator.

    • grimp says:

      Still valiantly fighting deflation.

  16. Wisdom Seeker 2.0 says:

    This is a more unnerving (but long overdue) statement: The Fed’s models of the economy “are not describing the inflationary dynamics that we’re seeing right now,” he said.

    That’s admitting that they don’t really know how the controls they’re applying actually operate, to fly the plane that they claim to be “soft landing”.

    • grimp says:

      “Long and variable lags” present a challenge to a dynamic control system. You increase gains and still nothing happens… until suddenly it does, and if gains are too high, look out. I really doubt that the FEDs models are useful other than in an academic setting – and as they have admitted the models do not describe what is going on. This happens in too many fields of science, where we put too much faith into a computer model that has never been validated.

  17. VT says:

    Small typo: something that ever(y) Fed official has emphasized.

    Thanks for your tireless work and grounded perspective as always Wolf

  18. anon says:

    Here in Northeast Illinois gasoline prices have been rising a few cents a gallon for each week.

    One theory you hear in the media is the switch to ‘summer blend’. Another theory you hear is the turmoil in the mideast. Yet another theory is that the current administration is trying to choke off drilling to limit fossil fuel production because of climate change.

    It could be a little bit of all 3 in some combination.


    In any case gasoline prices continue to rise.

    • BobC says:

      If the “current administration” doesn’t knock off this nonsense, then within a year they will be known as the “former administration”!

  19. Ciprian Gal says:

    As you focus on the Federal Reserve’s discussions and its perception as a lagging indicator, today’s unemployment claims have shown a slight increase, despite the four-month average hovering around 1.8 million. News outlets are now highlighting the possibility of more tech layoffs, including those at Amazon and various banks. It’s crucial to pay attention to these developments because if the situation worsens, regardless of inflation concerns, the Fed may decide to cut rates in June or July to fulfill its dual mandate. Whether we like it or not, this is the reality of the situation.

    • Wolf Richter says:

      Make sure you understand that layoff announcements are just that. Actual layoffs by big companies are global, and you don’t know where they take place. And then they may not lay off as many as they claimed they would. I’ve tracked Google 12,000 announced layoffs, and it actually only laid off 8,000 and then started hiring again:


      And at the last quarter, its headcount was down by only 7,732 employees — GLOBALLY, not just in the US. So take those layoff announcements with a grain of salt:

      We have a good measure of “layoffs and discharges,” which I just covered a couple of days ago:

      Layoffs and discharges as a percent of nonfarm employment ticked up to 1.04%. Before the pandemic, this ratio was around 1.20%. During the pandemic layoffs in the spring of 2020, it spiked to nearly 6%, then plunged to 0.9% as labor shortages defined the labor market.

  20. Depth Charge says:

    When inflation was absolutely roaring close to 10%, the FED called it “transitory” and Jerome Powell said “we’re not even thinking about thinking about raising rates.” He should have been immediately removed from office for dereliction of duty.

    Now, when inflation is still not down to target, all they talk about is when it will be appropriate to “cut rates.” It’s VERY clear that all they care about is easy money. That’s all they want to do is get back to easy money for billionaires and cashed up speculators.

  21. Gary says:

    Inflation isn’t going to move sideways, it is going to move up. Since Jerome Powell, and the Federal Reserve, like Latin prefixes like “dis,” the correct Latin prefix is “re ” for “reinflation.”

  22. Bond Vigilante Wannabe says:


    Is “un-disinflation” a word?

    • 91B20 1stCav (AUS) says:


      may we all find a better day.

  23. Desert Rat says:

    Goldman Sucks just lowered their savings rate by a tenth of a percent on three rate cut expectations. They actually said that was the reason for the drop. Wall street keeps on being delusional.

    • Wolf Richter says:

      If you don’t like their chintzy savings rate, yank your cash out and put it in short-term T-Bills and set them up on auto rollover. The 2-month bills the government auctioned today had an investment rate of 5.38%. You can do that either at your broker or at TreasuryDirect.gov.

      • Desert Rat says:

        Yes, I agree. There are much better options such as those you suggested. It was just interesting, and not surprising, that they were already planning the three rate cuts and going so far as to use that as an excuse to cut rates now.

        • Wolf Richter says:

          Yes. For banks, the interest they pay on deposits is a big part of their cost of funding. If they can cut their costs of funding, their profit margins go up, so they will try to keep the rate as low as possible, by hook or crook, without losing too many deposits.

          If they lose too many deposits too quickly, the bank can collapse, as we have seen with SVB.

      • heyjagoff says:

        Spot on. I’m a lazy f*** so just piling all my dry powder into Vanguard VUSXX. I keep my focus speculating in other assets. No time to watch pennies in T-bills

  24. Desert Rat says:

    “Kashkari just turned the dial a little further. The stock market didn’t like this at all.”

    It was beautiful.

  25. Ian says:

    “ If the economy continues to grow as it has, powered by consumer spending, it also raises the question “of why cut rates,” he said.”

    DUHHHHH put more monies in consumer pockets and let the taxes rip on the rich. 🪦

    Seriously for so many smart people this feels like a pretty obvious thing to say. Trying would be harder OFC but come on, nerds, model it out.

    • Wolf Richter says:

      The stock market sure thought it wasn’t an obvious thing to say.

      • Ian says:

        Who watches the Fed? Not most people. Most rich people.

        And rates can stay locked, who cares?

        Tax the 💩 outta the second (third, $2mm+, idk set a bar) house and watch the real estate market bloom AND boom. 💰 💥

        Paying 20% on your third home makes it expensive. Suddenly there’s a great incentive to have people with nice houses move into really nice houses and people with no houses move into something.

        We need to hard reset all those foreign oligarch penthouses anyway, let’s go. Fix the corporate real estate market in the mix with some fun rejigging.

        Sad faces on some, but happy faces on many.

  26. Lune says:

    Why is inflation the sole determinant of a rate cut? Even if inflation goes to zero, if the labor market is tight, and GDP growth remains healthy, why cut rates?

    It used to be we’d try to set the highest rate that wouldn’t push us into a recession. Now the Fed seems to target the lowest rate that doesn’t turn us into Weimar. If the economy can tolerate current rates, why not keep them there and save the rate cuts for an actual recession? I guess because Wall St. Would prefer as big an asset bubble as physically possible?

    • AuHound says:

      “…because Wall St. would prefer as big an asset bubble as physically possible?”

      Lune, boy do you ever have that right!!!

  27. The Hunt for Red October says:

    A promise made is a promise kept, never should have mentioned 3 rate cut expectations for 2024 to the market in 2023. 75 basis point is what expected to be delivered, Wall St. Cry babies have priced them in. Never try to take candy from a subsidized spoiled brat. Fed has shown to be irresponsible with unnecessary jargon, prompting speculation by markets. It will be interesting to see if Gomer Pyle cut his throat to blow his nose before elections. The inflation rabbit definitely got the Gun.

    • grant says:

      No one from the fed “promised” 3 rate cuts. That’s just a fallacious assumption from people who can’t comprehend what a the dot plot actually says.

      Now, should the Fed get out of the “publishing speculation about the future” business? Probably. But it won’t change the the fundamental problem that a large segment of the financial world will blame everyone but themselves when their interpretations of scattered chicken bones proves wrong.

  28. ChrisFromGA says:

    This morning’s jobs report from the BLS seems to have ripped the face off of Powell and the pivot mongers.

    Kashkari is definitely on the right track. The bond markets aren’t going to let Powell cut until we see the 3-month yield turn down towards 5.25 or lower, and there is zero sign of that on the horizon.

  29. Von Meren says:

    303,000 jobs in March. Another hot jobs print… Inflation isnt moving “sideways”.

    “Sideways” is the new “transitory”.

    • The Real Tony says:

      A different story in Canada 2,200 jobs were lost. The Canadian dollar is only down about 1/4 percent as the Bank of Canada tries to fend of the Canadian dollar shorts.

  30. Paul S says:

    Maybe there is a code book for insiders, wishy washy statements hint hint hints for the select to quietly retrieve their money from the market before it tanks? Great article and very interesting comments. Best of luck for you honest investors navigating through the craziness. It reminds me of those hero movies where the ‘guy’ hops from rock to turtle to lilly pad while the crocs snap at their feet.

    In our house we now seem focused on just protecting what ‘we got’ from a life of hard work. As my wife said a few nights ago, it’s nice to be just little people under the radar….that people leave alone. Inflation sucks, but then we just reduce what we buy, or change what we buy….like you’re kind of supposed to do? And if enough people do that the market adjusts. A real market, anyway. Maybe mom and poppers should stay out of this rigged market in the first place?

    In another lifetime I was working as a bush pilot flying a lot of mining industry people in Yukon. In my twenties I decided to buy (modest) into a very ‘rich’ silver mine. It was a good property. I knew the geologists and assays. I then asked a wealthy drilling contractor I knew what he thought and he told me to stay out of the market, mining anyway. His gist, if you don’t have inside (secrets) info then it all just depends on the promoter… and wrong promoter = poor investment. Listened to him and never regretted it.

    Staying in your lane of expertise works, imho. We don’t like Vegas, either. :-)

  31. Thomas says:

    What inflation rate are you looking at? The core PCE price index is continuing to move downward without much problem. It is currently at 2.8%, which is just slightly above the FOMC projection of 2.5% for the year.

    • Wolf Richter says:

      LOL… Even Powell is pooh-poohing you.

      From my article:


      The core PCE price index, the inflation index that the Fed is focused on and refers to all the time, was revised up today for January to an annualized month-to-month growth rate of 5.6% (up from the original 5.1%) on a big up-revision of the index for core services to an annualized rate of 7.9% (up from the original 7.1%). In core services is where inflation is now solidly entrenched.

      So in February, on top of those upwardly revised figures for January, the core PCE price index rose by 3.2% annualized from January (+0.28% not annualized), according to the Bureau of Economic Analysis today. This pushed the six-month annualized core PCE price index to 2.9%, the highest since July.

      Powell cites this 6-month measure (red in the chart below) all the time because it shows the recent trend better than the month-to-month readings (blue), which are super volatile, and the year-over-year readings, which are too slow in reacting to changing trends. The Fed’s target is 2%.

  32. Shocka Locka says:

    Then one day later, Bowman (who does vote) says there is a chance the fed may need to raise rates if inflation does not come down further. Excellent!

  33. Jackson Y says:

    It’s now April and the economy is still firing on all cylinders. A whole bunch of commodities prices are spiking too. 😬

    • BigAl says:

      I’d say consumption is firing on all cylinders. The rest? It’s a very mixed picture.

  34. Lava Will Flow says:

    Re: TD comment and…

    “Yes. For banks, the interest they pay on deposits is a big part of their cost of funding. If they can cut their costs of funding, their profit margins go up, so they will try to keep the rate as low as possible, by hook or crook, without losing too many deposits.

    If they lose too many deposits too quickly, the bank can collapse, as we have seen with SVB.”

    I do the Treasury Direct 4 and 8 week and it’s quite nice to experience the Federal Gov’t pay off my 2.5% mortgage for me every month. However, recently I made a large deposit to my local CU(where my wires transfer to TD) and the CU put a 12 days “hold” on my funds as “standard” policy before I could get it into TD. I assume it is bundling larger deposits and also using TD! Banksters will steal, every chance they get. This same CU let a past President retire after a whistleblower exposed him for stealing $1.2m…

  35. BigAl says:

    And remember that Kashkari was considered a “hyper-dove” not all that long ago.

    A lot has changed:

  36. SpencerG says:

    The stock market didn’t like that at all.

    Yeah… I will bet! These stock market investors have gotten way out over their skis thinking that rate cuts are just around the corner.

  37. PHILL says:

    Thank you as usual for the excellent reporting Wolf.

    Excuse me if this seems like a question with an obvious answer to some:
    It seems that the common narrative about the stock market is that if Fed rates go down, then that is good for stocks and they should go up. But when I look at charts going back many decades, drops in the Fed rates usually coincide with drops in the stock market. What am I missing? TIA

    • Wolf Richter says:

      “I would be extremely interested to see what the inflation rate would be if the costs of borrowing were included.”

      Generally, when the Fed cuts its rates a lot it’s because there’s a big-ass problem somewhere. See the rate cuts that started in the fall of 2007, when the Financial Crisis was already showing its teeth. About six months after the rate cuts STARTED, Bear Stearns collapsed (March 2008), and the whole thing went to hell in a hand basket from there.

      The Fed also started cutting nine months into the dotcom bust after it started hitting the economy. But stocks had already crashed by the time the Fed started cutting, and they kept crashing after it started cutting.

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