Fed's Kashkari Shifts to One Rate Hike in 2025: What Changed
Minneapolis Fed president now sees one rate hike this year, citing U.S.-Iran deal uncertainty and AI-driven spending pressures.
Neel Kashkari just moved the goalposts. The Minneapolis Fed president flipped his outlook and now projects one interest-rate hike in 2025 — and if you're trading rates, bonds, or anything rate-sensitive, you need to pay attention.
Two things changed his mind. First, doubts surrounding the U.S.-Iran peace deal are keeping geopolitical risk elevated, which feeds inflation uncertainty. Second, the AI infrastructure buildout is pumping massive capital into the economy — the kind of spending that keeps upward pressure on prices. Put those two together and the case for staying on hold gets weaker fast.
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This is a notable shift. Markets had been pricing in cuts, not hikes. A single hawkish voice at the Fed doesn't move policy alone, but Kashkari carries weight and his pivot signals that the "higher for longer" crowd isn't done yet. If other Fed officials start echoing this view, rate-cut bets could unwind hard.
For traders, this is your cue to reassess duration risk. Long-duration bonds, rate-sensitive growth stocks, and anything leveraged to cheap money deserves a second look. The AI boom that everyone is celebrating could ironically be a reason the Fed keeps its foot on the brake.
The macro picture is messier than the consensus thought just weeks ago. One Fed official changing his dot doesn't make a trend — but it's a warning shot. Continue reading at MarketWatch.com
