According to Minneapolis Federal Reserve (Fed) President Neel Kashkari, markets may be overstepping their rate cut expectations, highlighting the disconnect between the US' current economic situation and investors' broader rate expectations.

Key highlights:

• Fed's Kashkari currently thinks only two rate cuts overall, and possibly only one in 2024.
• The base case is no more rate hikes, but another inflation flareup could justify a rate hike.
• If inflation proves to be more entrenched than initially thought, the first move is to hold higher for longer.
• Fed's Kashkari had initially expected two rate cuts through 2024 in December, hard to see how he would expect more rate cuts now.
• If the US economy continues to be healthy, why would Fed cut rates?
• The US labor market continues to move into better balance