Federal Reserve Kashkari: The weak job market should open the door for a rate cut in September

Federal Reserve's Kashkari stated that he is open to a rate cut in the next meeting due to the rising possibility of an overly weak labor market. In an interview, Kashkari said: "The balance of risk has changed, so it's appropriate to discuss a possible rate cut in September." Kashkari had previously suggested in June that there might not be a need for a rate cut before the end of this year. However, with unemployment rates rising from 3.7% at the beginning of the year to 4.3% in July, it indicates greater risks of economic slowdown. Kashkari mentioned that if there were no signs of weakness in the labor market and if unemployment remained within 3.7%-3.8%, he wouldn't even consider discussing whether or not to lower interest rates now. On contrary, circumstances have shifted as inflation is making progress and some worrying signs are appearing on job frontlines . Nevertheless, Kashkari still believes there is no reason for more than a 25 basis point rate cut because layoff rates remain low and numbers applying for unemployment benefits haven't shown significant deterioration.