Economic Uncertainty Looms Despite Tariff Pause

Minneapolis Federal Reserve President Neel Kashkari has issued a stark warning about the potential for continued economic uncertainty to push the US economy into a downturn. His comments come at a time when the nation is grappling with the implications of a 90-day pause in tariffs, a move that may offer some relief from inflationary pressures but leaves many questions unanswered.

Market Instability and Labor Market Concerns

Speaking on CBS, Kashkari highlighted how market instability could adversely affect both the economy and the labor market. He pointed out that while the temporary halt in tariffs might ease inflation in the short term, the duration of these tariffs could still lead to inflationary pressures. "Uncertainty by itself is likely not going to create inflation, but it could slow the economy down," Kashkari remarked, underscoring the delicate balance policymakers must maintain.

High Bar for Interest Rate Cuts

Despite observing signs that businesses are beginning to pull back on hiring, Kashkari emphasized that the threshold for cutting interest rates remains high. This stance reflects the Federal Reserve's cautious approach to monetary policy in the face of ongoing economic uncertainties.