Neel Kashkari, President and CEO of the Federal Reserve Bank of Minneapolis, speaks during an interview with Reuters in New York City, New York, U.S., May 22, 2023. REUTERS/Mike Segar/ File Photo

By Ann Saphir and Howard Schneider

(Reuters) - Federal Reserve Bank of Minneapolis President Neel Kashkari on Friday said job market risks warranted this week's rate cut and likely reductions at the central bank's next two meetings, and downplayed any worry that the Fed was losing trust with the public given inflation that is still above target and the ongoing political pressure from the Trump administration.

In a new essay overnight Kashkari laid out his case for accelerated rate cuts, while in later comments to CNBC he rejected the suggestion that Fed debates were inevitably becoming more political given the arrival on the board of new Governor Stephen Miran, on leave as the chair of President Donald Trump's Council of Economic Advisers.

"This was like any other transition where somebody comes in and everybody says 'hey, welcome to the table. We look forward to hearing your contributions.' And then everybody went about their business as normal," Kashkari said on CNBC. "What was remarkable about this meeting was how unremarkable it was."

Miran, sworn onto the Fed board on Tuesday, is scheduled to make his first public comments later Friday morning on CNBC and appear again later in the afternoon on Fox Business and on Monday at an event in New York - a rapid-fire round of public exposure in a job where newcomers often wait months to comment about monetary policy. Because of how his appointment process unfolded, Miran may only have four months, however, to make his presence felt before returning to the Trump administration.

Kashkari did not comment when asked about Miran dissenting at his first meeting in favor of a larger half-point rate cut, and apparently penciling in a rate projection far lower than his colleagues and more in line with where Trump feels rates should be set.

"We have 19 participants with a wide range of views, and everybody's contributing to the discussion," Kashkari said of the seven members of the Board of Governors and 12 Reserve Bank presidents who join the debate at Fed meetings.

PUBLIC STILL HAS FAITH IN FED INDEPENDENCE

Kashkari also said that recent developments in bond markets, with the 10-year yield declining of late to around 4.1%, showed that the public seemed to maintain faith in the Fed's independence and ability to control inflation despite efforts by Trump to gain influence, including through a so far unsuccessful effort to fire Fed Governor Lisa Cook.

In markets and among members of Congress from both parties, "there's widespread appreciation for how important Fed independence is," Kashkari said. "I also think there's a lot of confidence on both sides of the aisle that Fed independence...will be protected, and that the courts also see it that way...I think people are betting on the institutions of the country continuing to keep Fed independence, to keep it outside of the short-term political process."

Cook's firing has been blocked by two federal courts. The Trump administration's request that it proceed is pending now before the Supreme Court.

Kashkari's policy essay represents a shift from June when he felt only two quarter-point rate cuts would be needed this year. A drop in job creation since then helped change his mind.

Kashkari is not a voter this year on interest rate policy.

"I believe the risk of a sharp increase in unemployment warrants the committee taking some action to support the labor market," Kashkari wrote, adding that he also now feels there's little risk of a sharp rise in inflation from tariffs.

"Unless there is some large increase in tariff rates from here or some other supply-side shock, it is hard for me to see inflation climbing much higher than 3% given announced tariff rates and the relatively small share of imported goods in overall U.S. consumption."

Imports account for about 11% of U.S. GDP.

Worries that tariffs could reignite inflation had kept the Fed from cutting interest rates all year. But on Wednesday the central bank decided to lower the policy rate to the range of 4.00%-4.25% after recent data showed monthly job gains had dropped dramatically and the unemployment rate ticked up to 4.3%.

(Reporting by Ann Saphir; Editing by Kim Coghill and Andrea Ricci)