Kashkari Downplays Treasury Yield Surge, Says Market Functioning Fine
By Aboki Forex —
Federal Reserve Bank of Minneapolis President Neel Kashkari has dismissed concerns over rising US Treasury yields, saying the market is working well and the latest surge will not likely alter monetary policy decisions. Speaking on CBS's Face the Nation on Sunday, Kashkari said there is no sign of stress in the Treasury market.
Market functioning as it should
“There's every indication that the US Treasury market is functioning as it should, that trades are taking place, that there's liquidity in the market, and so that enables us to focus on the federal funds rate as our primary policy tool to get inflation back down,” Kashkari said.
Treasury yields across the curve rose last week. The benchmark 10-year ended the week at around 4.73%. The 30-year remained near its highest level since 2007. Kashkari acknowledged that yields are high relative to recent history, but pointed out they were meaningfully higher in the 1990s.
Rate hike dissent and September meeting
Fed policymakers will meet next in September. At their July gathering, they left interest rates unchanged for the fifth straight time. Kashkari was among three officials who dissented, favouring a quarter percentage point rate hike because of persistent inflation.
On Sunday, he repeated those worries but stopped short of saying he would call for another hike in September. “We need to see more data, but I don't want to prejudge the next meeting,” he said. “But I'm not feeling confident right now that inflation is heading back down to target in a short period of time.”
Jackson Hole in focus
This week investors will closely watch the Fed's new chairman, Kevin Warsh, who is scheduled to deliver keynote remarks on Friday at the central bank's annual symposium in Jackson Hole, Wyoming.