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Federal Reserve Watch for Jan. 5: Kashkari Says Federal Funds Rate Close to Neutral

BY MT Newswires | ECONOMIC | 01/05/26 02:52 PM EST

02:52 PM EST, 01/05/2026 (MT Newswires) -- Minneapolis Fed President Neel Kashkari (voter) said in an interview with CNBC that the current level of the federal funds rate is close to neutral, adding that inflation continues to slow, though it remains too high, and that the risks of weaker employment growth have increased.

Recent comments of note:

(Jan. 4) Philadelphia Fed President Anna Paulson (voter) said that the FOMC could delay the next rate reduction until later in the year so that it can observe the effects of the easing that has already been put in place.

(Dec. 30) Minutes of the Dec. 9-10 FOMC meeting showed considerable disagreement over the future path of monetary policy after a string of rate reductions, with some arguing the need for further reductions as the labor market slowed and others advocating for a pause until more current economic data, which were delayed by the government shutdown, could be released.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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