Fed's Kashkari Says It Is 'Reasonable' to Predict a December Rate Cut

Fed's Kashkari Says It Is 'Reasonable' to Predict a December Rate Cut By Hardika Singh

Minneapolis Fed President Neel Kashkari said in a TV interview Sunday that it's a "reasonable prediction" that the Federal Reserve will wait until December to cut interest rates. With the one-cut projection in mind, "that would likely be toward the end of the year," he said. Meanwhile, Democrats and Republicans are vying to turn the 21% rate in opposite directions-with each percentage point worth more than $130 billion over a decade in tax revenue. And the Securities and Exchange Commission is investigating whether Elon Musk committed civil fraud. Read on for this news and more.

Top News Kaskhari: It Is 'Reasonable' to Predict Fed Won't Cut Rates Until Dec

Appearing on CBS's "Face the Nation" on Sunday morning, Kashkari noted that the Fed's latest forecast calls for only one rate cut this year, less than what many economists - and investors - had been expecting. "It's really going to depend on the data," Kashkari told CBS News' Margaret Brennan, according to a transcript. "And we're in a very good position right now to take our time, get more inflation data, get more data on the economy, on the labor market, before we have to make any decisions." ( MarketWatch )

U.S. Economy Corporate Tax Rate Spurs Political Fight With Over $1 Trillion at Stake

The 21% U.S. corporate tax rate is the biggest single variable in the sprawling 2025 tax debate, and the two parties are trying to turn that dial in opposite directions with major consequences for companies' profits and federal revenue. The rate could climb as high as 28% if Democrats sweep November's elections and move as low as 15% if Republicans gain full power.

Financial Regulation Elon Musk and the SEC Are on a Collision Course Again

Regulators once accused Elon Musk of fraud over a possible buyout that never happened. Now they are positioned to make similar allegations over one that did.

Forward Guidance Monday (all times ET)

8:30 a.m.: Empire State Manufacturing Survey

9 a.m.: IMF "Broadening the gains from generative AI: the role of fiscal policies" Staff Discussion Note launch

Tuesday

8:30 a.m.: Advance Monthly Sales for Retail & Food Services

1 p.m.: Fed Bank of St. Louis President Alberto Musalem speaks at CFA Society St. Louis luncheon

1 p.m.: Fed Governor Adriana Kugler delivers remarks on economic outlook and monetary policy

1 p.m.: Fed Bank of Dallas President Lorie Logan speaks at Headliners Club Speaker Series event

Research U.S. Home Sales Drop To One Of The Lowest Levels In Years

Home sales fell 1.7% month over month in May, and dropped 2.9% from a year earlier, according to Redfin. There have been just two months in the past decade with fewer home sales: October 2023, when mortgage rates jumped to a 23-year high, and May 2020, when the onset of the pandemic brought the housing market to a halt and home sales to a record low, Redfin says. Buyers today are facing a hot market even though few homes are changing hands, according to Redfin. Sales are sluggish because high home buying costs are making both house hunters and prospective sellers skittish. With so few homes for sale, buyers in some markets are getting into bidding wars, which is helping push home prices to record highs. However, sales may pick up later this year if mortgage rates slowly tick down as expected. - Chris Wack

Basis Points Signs of cooling inflation have driven a furious bond rally this month, boosting stocks to records and promising to inject some life into the listless housing market. The sharp rise in bond prices has pushed down the yield on the 10-year U.S. Treasury note by nearly a half percentage point since late May. The yield on Friday notched its largest two-week decline of the year, settling at 4.212%. - Sam Goldfarb Insurance costs are exploding for condo associations across the U.S., raising the cost of homeownership and making it harder for some owners to sell their units. The increase in insurance premiums is a major factor behind rising condo association fees. Condo dues rose 20% between 2022 and 2024, according to an analysis of 1,800 associations in 44 states by real-estate tech company Rexera. - Nicole Friedman China's central bank kept its key policy rates unchanged on Monday, indicating a likely hold on the benchmark lending rate later this month. The People's Bank of China injected 182 billion yuan ($25.09 billion) worth of liquidity into the financial system via its medium-term lending facility, which will charge banks an interest rate of 2.5%, unchanged from the previous operation. The PBOC also offered CNY4 billion in funds to banks at an interest rate of 1.8%, also unchanged from its earlier operation. - Singapore Editors China's broken housing market isn't responding to some of the country's boldest stimulus measures to date- at least not yet . The Chinese government has been stepping up support for housing and other industries in recent months as it tries to revitalize an economy that has continued to disappoint since the early days of the pandemic. - Rebecca Feng and Jason Douglas Beijing has launched an antidumping probe into pork imports from the European Union, in possible retaliation against the EU's recent tariff moves, as trade tensions mount between China and the 27-member bloc. The trade investigation into imported pork products that include offal from the EU will start Monday, China's commerce ministry said in a statement Monday. The probe could run for a year and could be extended for another six months, the ministry added. - Singapore Editors The Bank of England is expected to start interest-rate cuts in August and continue cutting at a cautious pace, Bank of America Research asaid. "We expect the BOE to keep bank rate and guidance unchanged at this week's policy meeting," BofA said. U.K. wage growth and service inflation pressures could, nonetheless, cause the BOE to start interest-rate cuts at a later date than in August, the bank. BofA predicts two BOE rate reductions in 2024 of 25 basis points each, and four rate cuts in 2025, to reach 3.75% at the end of 2025. - Miriam Mukuru Increases in Canadian manufacturing and wholesale sales in April were marginally lower than first estimated, but not by enough to make Capital Economics' Stephen Brown doubt Statistics Canada's preliminary estimate that GDP rose by a solid 0.3% on-month. A 1.1% rise in factory sales values was not enough to make up for a 1.8% decline the month before, but was better than Brown expected. - Robb Stewart UBS Group said it expects to book a provision of around $900 million on a buyout offer to investors in former Credit Suisse funds linked to now-defunct specialist lender Greensill Capital. This marks the latest step by the Swiss financial group to move on from issues that hindered its once rival and led to its takeover in a deal engineered by Swiss authorities and completed a year ago. - Adrià Calatayud About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Hardika Singh in New York. Send your tips, suggestions and feedback to [hardika.singh@wsj.com].

This article is a text version of a Wall Street Journal newsletter published earlier today.

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June 17, 2024 07:16 ET (11:16 GMT)

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