By Ann Saphir
(Reuters) - Minneapolis Federal Reserve President Neel Kashkari on Friday signaled he continues to support further U.S. interest rate cuts, saying monetary policy should be "somewhat accommodative" given the risks to the economic outlook.
The Fed reduced borrowing costs in July and again in September, citing slowing global growth and weakness in U.S. business spending and factory output.
While U.S. household spending has remained strong, job growth has slowed, and ongoing U.S.-China trade tensions and uncertainty around Britain's impending exit from the European Union continue to cloud the outlook, Kashkari said.
"I think the data has come in since the last meeting generally softer; generally it's been a little bit more downside than I would have expected at the September meeting," Kashkari said at the Federal Home Loan Bank of Des Moines Leadership Summit. "I don't want to prejudge what the committee will do, but I think we are all trying to be data dependent, and as the data moves, I think our outlooks tend to adjust."
Currently the Fed's policy setting is neutral or possibly slightly contractionary, Kashkari said, pointing to the fact that the Fed's current target for overnight lending rates, at between 1.75% and 2%, is above the yield on the 10-year Treasury note.
"I think monetary policy should be somewhat accommodative in light of the risks we are seeing," he said.
Interest-rate futures traders are currently pricing in a 90% chance of an October rate cut.