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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

Iran agrees to resume Vienna nuclear talks in November

Ali Bagheri (R) with Enrique Mora in Tehran on Oct. 14. Photo: Iranian Foreign Ministry handout via Getty

Iran's new chief nuclear negotiator said following a meeting in Brussels on Wednesday that Iran would resume negotiations in Vienna before the end of November, with the exact date to be set next week.

Why it matters: The Vienna talks have been frozen since Iran's new hardline president, Ebrahim Raisi, was elected in June. This is the most direct commitment from Raisi's government to return to the negotiating table.

Dan Primack, author of Pro Rata
6 hours ago - Politics & Policy

Democrats' billionaires tax explained

Illustration: Aïda Amer/Axios

There is now legislative language behind the push to tax American billionaires on unrealized capital gains, as Sen. Ron Wyden last night released his 107-page plan.

Why it matters: This would be a sea change in U.S. tax policy, which has only applied to realized gains (otherwise known as income).

COP26 head warns Glasgow summit will be "harder than Paris"

Alok Sharma, U.K. COP26 president, in Milan on Sept. 30, 2021. Photo: Stefano Guidi/Getty Images

U.K. COP26 President Alok Sharma told reporters Tuesday that the upcoming talks in Glasgow, widely viewed as the last chance to avoid some of the worst consequences of global warming, will be extremely difficult.

Driving the news: Sharma sought to temper expectations and note that the agenda features some of the toughest items that negotiators have punted on at previous summits.