Fed's Kashkari not worried about rising US Treasury yields

Federal Reserve Bank of Minneapolis President Neel Kashkari stated on Sunday that the rising U.S. Treasury yields do not pose any concern and are unlikely to affect monetary policy decisions. Speaking on CBS's Face the Nation, Kashkari affirmed that the U.S. Treasury market is operating smoothly with sufficient liquidity and trades proceeding as anticipated. This situation allows the Federal Reserve to concentrate on the federal funds rate as its primary tool to reduce inflation.

Treasury yields experienced an increase last week, with the 10-year benchmark closing near 4.73%, while the 30-year yield stayed close to its peak since 2007. While Kashkari acknowledged that current Treasury yields are high compared to recent history, he pointed out that they were significantly higher during the 1990s. The Federal Reserve's policymakers are scheduled to convene in September.

During their meeting in July, the Fed opted to maintain interest rates unchanged for the fifth consecutive time. Kashkari was among three officials who dissented in favor of a quarter percentage point rate increase due to worries about persistent inflation. On Sunday, Kashkari reiterated his concerns about inflation but did not pledge to support a rate hike at the upcoming September meeting.

He emphasized that more data is needed, but he does not wish to predict the outcome of the next meeting. However, Kashkari expressed that he is currently not confident that inflation will revert to its target within a short period.