Fed president Neel Kashkari stresses limits of central bank power on trade negotiations
- Neel Kashkari outlined the Federal Reserve's limited ability to influence the long-term economic outcomes of trade negotiations.
- He discussed concerns about tariffs increasing prices and reducing economic activity, highlighting the challenges faced by the Fed.
- Kashkari concluded that while uncertainty and volatility exist in the markets, transactions continue to occur, demonstrating some resilience.
On April 13, 2025, Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, participated in an interview on the CBS show 'Face the Nation with Margaret Brennan' where he addressed current economic challenges facing the United States. During this segment, he emphasized that global investors are trying to determine a new normal for the economy and that the Federal Reserve's influence over this new normal is minimal. Kashkari conveyed that the economic environment remains uncertain, making it difficult for the Federal Reserve to predict or influence future economic stability and activity trends. Kashkari expressed concern over the potential of tariffs and their impact on economic activity and consumer prices, reinforcing the idea that while the Federal Reserve monitors market and economic adjustments, the powers of the central bank are limited. He highlighted that tariff impositions could lead to increased prices and decreased economic activity, complicating the Federal Reserve's ability to manage economic fluctuations. He acknowledged that the recent uncertainty caused by trade negotiations has resulted in significant market volatility, which he noted was reminiscent of the early days of the COVID-19 pandemic in March 2020. Despite these challenges, Kashkari indicated that markets continue to function and that transactions are occurring, which shows resilience in the system. He conveyed the sentiment that the Federal Reserve's primary role is to stabilize inflation expectations while navigating the ups and downs of the economy, as many factors influencing economic activity ultimately reside outside the control of the Federal Reserve itself. The ongoing discussions related to fiscal policies and fast-evolving trade negotiations require constant monitoring from the Fed and participation from other government branches. In conclusion, Kashkari’s insights provided a frank overview of the limitations of the Federal Reserve in managing the long-term economic impacts of trade policies. His interview highlighted the importance of collaborative approaches between various governmental sectors to address economic challenges posed by fluctuating trade conditions.