Federal Reserve Bank of Minneapolis President Neel Kashkari recently addressed the possibility of additional interest-rate increases, indicating that while the odds are low, such hikes have not been entirely ruled out. Speaking at an event in London, Kashkari emphasized that policymakers should wait for more evidence of cooling inflation before considering rate cuts, especially in light of the robust wage growth and resilient economy.

Despite acknowledging the restrictive nature of the current policy stance, Kashkari stressed the importance of assessing the impact on demand before making any new policy decisions. He expressed the need to gather more data before reaching conclusions, indicating that any potential rate cuts would likely not exceed two before the end of the year.

The Federal Open Market Committee is expected to maintain interest rates at a 23-year high during their upcoming meeting in June. Kashkari expressed confidence that growth does not necessarily need to slow or unemployment rise for inflation to eventually return to the Fed’s 2% target.

Highlighting the risks within the commercial property market, Kashkari warned of potential significant losses in the sector and anticipated surprises in the distribution of these losses. Economists are awaiting the upcoming inflation report for April, with expectations of some relief in the Fed’s preferred gauge of underlying inflation.

Discussing the recent decision to slow the pace of shrinking the central bank’s balance sheet, Kashkari noted the importance of monitoring developments in the commercial property market and their potential impact on the broader economy.