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Neel Kashkari treats a tree on his property as though it were the current 2.5% Fed Funds target rate. Photo: Linda Davidson/The Washington Post via Getty Images

This week's decision to keep interest rates on hold was not unanimous. For the first time in Jay Powell's tenure as Fed chair, there was a dissent: St. Louis Fed president James Bullard said the Fed should have cut rates by 25 basis points.

Minneapolis Fed president Neel Kashkari was even more dovish. (He was also present in the room, but doesn't get a vote until 2020.) Once the final decision was made, Kashkari went public with his position on Medium.

"I advocated for a 50-basis-point rate cut to 1.75 percent to 2.00 percent and a commitment not to raise rates again until core inflation reaches our 2 percent target on a sustained basis. I believe an aggressive policy action such as this is required to re-anchor inflation expectations at our target."

Kashkari's logic is pretty simple: Inflation is too low, and so the Fed needs to keep on loosening monetary policy until it gets up to the target level.

  • By the numbers: The Fed adopted its 2% target for core PCE inflation in 2012. The target is supposed to be symmetrical: Inflation is meant to be above 2% and below 2% roughly equally. But since the target was set, the inflation rate has been consistently below 2%, making the target seem like more of a ceiling.

The bottom line: Cutting rates with the stock market at a record high might seem odd, but it's happened before. If the market continues to rally through the next Fed meeting, it might well happen again.

Go deeper

1 hour ago - World

Netanyahu and Israel reluctantly adjust to a post-Trump Washington

Netanyahu (R) and Biden in 2010. Photo: Avi Ohayon/GPO via Getty

Prime Minister Benjamin Netanyahu and his close aides are very nervous about the transition to a new U.S. administration after a four-year honeymoon with Donald Trump. One Israeli official told me it felt like going through detox.

What he's saying: Netanyahu congratulated Biden minutes after he was sworn in, saying in a statement that he looked forward to working together to "continue expanding peace between Israel and the Arab world and to confront common challenges, chief among them the threat posed by Iran."

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. State of play: New coronavirus cases down, but more bad news ahead.
  2. Politics: Biden set to immediately ramp up federal pandemic response with 10 executive actions — Scoop: Joe Biden's COVID-19 bubble.
  3. World: Biden will order U.S. to rejoin World Health OrganizationBiden to bring U.S. into global COVAX initiative for equitable vaccine access.
  4. Vaccine: Amazon offers to help Biden administration with COVID vaccine efforts.
Dion Rabouin, author of Markets
3 hours ago - Economy & Business

First glimpse of the Biden market

Photo: Jonathan Ernst-Pool/Getty Images

Investors made clear what companies they think will be winners and which will be losers in President Joe Biden's economy on Wednesday, selling out of gun makers, pot purveyors, private prison operators and payday lenders, and buying up gambling, gaming, beer stocks and Big Tech.

What happened: Private prison operator CoreCivic and private prison REIT Geo fell by 7.8% and 4.1%, respectively, while marijuana ETF MJ dropped 2% and payday lenders World Acceptance and EZCorp each fell by more than 1%.