Federal Reserve's Kashkari: Weakness in the labor market should open the door to a rate cut in September

On August 19, Kashkari, the Federal Reserve, said he was open to cutting interest rates at the next meeting because the possibility that the labor market is too weak is rising. "The balance of risks has shifted, so the discussion about a possible rate cut in September is appropriate," Kashkari said in an interview. Kashkari said in June that there may be no need to cut rates until the end of the year. But the unemployment rate rose from 3.7% at the beginning of the year to 4.3% in July, indicating a greater risk of an economic slowdown. Kashkari said he would not even discuss whether it was time to cut rates now if he did not see evidence of labor market weakness and if the unemployment rate remained in the 3.7% to 3.8% range. On the contrary, the situation has shifted, as inflation is gaining ground and there are some worrying signs in the labor market. Still, Kashkari said he sees no reason to cut rates by more than 25 basis points, as layoffs remain low and the number of people filing for unemployment benefits shows no significant deterioration.