Kashkari: U.S. Treasuries Are Not Broken, Federal Reserve Does Not Need to "Bail Out the Market"

Federal Reserve Bank of Minneapolis President Neel Kashkari said that although the 10-year U.S. Treasury yield has recently risen to around 4.7%, it has not reached historically abnormal levels. There are currently no signs of dysfunction in the U.S. Treasury market, so the Federal Reserve does not need to adjust its policies in response to Treasury yield fluctuations and can continue to prioritize controlling inflation as its core priority. Kashkari noted that long-term U.S. Treasury yields are influenced by multiple factors including inflation expectations, AI investment, government borrowing, economic growth and productivity, and it remains impossible to determine the main driver behind the recent synchronized rise in global bond yields. U.S. Treasury issuance and debt market management should be the responsibility of the U.S. Treasury Department, while the Federal Reserve should focus on its inflation and employment mandates. He also warned that the Iran conflict could drive up energy prices, and U.S.-Canada trade frictions may prolong supply-side price pressures. Kashkari added that over the past few years, the Federal Reserve has repeatedly projected inflation would return to the 2% target within the next one to two years, but this timeline has been repeatedly delayed, and he is still not confident that inflation is quickly returning to the target. Markets are currently focused on this week's Jackson Hole Economic Symposium, and the speech by Wash on Friday may send more signals for the September interest rate decision.