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Neel Kashkari Confirms U.S. Treasury Market is Functioning Normally Despite Rising Bond Yields

Neel Kashkari, President and CEO of the Federal Reserve Bank of Minneapolis, stated that the U.S. Treasury market is currently operating as it should, maintaining sufficient liquidity for the Federal Reserve to focus on its primary mandate. During an interview on CBS News, Neel Kashkari noted that while 10-year and 30-year Treasury yields have reached elevated levels relative to recent history, they remain lower than levels seen in the 1990s. He emphasized that the current market conditions allow the Fed to continue using the federal funds rate as its primary tool to combat inflation. Kashkari expressed some skepticism regarding the immediate return of inflation to the 2% target, noting that geopolitical factors, such as the ongoing conflict with Iran, continue to impact energy and commodity prices. He also highlighted the importance of trade dynamics with partners like Canada, noting that supply shocks from tariff conflicts can delay the inflationary impact. While the Fed remains committed to the 2% target, Kashkari indicated that the Fed needs more data before making definitive decisions on the next interest rate move.

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