U.S. Treasury yields rising to multi-year highs do not pose a concern for monetary policy, Federal Reserve Bank of Minneapolis President Neel Kashkari said on Sunday. Speaking on CBS’s Face the Nation, Kashkari noted that the 10-year benchmark yield approached 4.73% last week, while the 30-year yield remained near its highest level since 2007, levels that were not uncommon during the 1990s.
The U.S. Treasury market is functioning properly with sufficient liquidity, Kashkari said, allowing the Fed to maintain its focus on the federal funds rate as the primary tool for achieving its inflation objectives. The Fed has held interest rates steady for five consecutive meetings, most recently in July, when three officials dissented in favor of a 25-basis-point increase.
Kashkari reiterated concerns about inflation but declined to commit to a rate hike at the next Federal Open Market Committee meeting in September. "We need to see more data, but I don’t want to prejudge the next meeting," he said. While acknowledging progress in lowering inflation, he added, "I’m not feeling confident right now that inflation is heading back down to target in a short period of time."
