The president of the Bank of the Federal Reserve of Minneapolis, Neel Kashkari, pointed out the confidence that the markets will remain ordered as investors classify the changing commercial policies of President Donald Trump and said that the Central Bank must remain focused on keeping anchored to inflation expectations.
Speaking after a week that brought a strong increase in 10 -year treasure yields, Kashkari said that the US trade and fiscal policy will determine where that number is going.
“In the Fed, our work is to maintain inflation under control so that this rate is not even higher,” said Sunday in CBS’s’ Face the nation.
Kashkari was among the Fed policy formulators that indicated last week that they are prepared to maintain the Fed policy rate in constant to minimize the risk that Trump’s tariffs trigger a persistent increase in inflation, even if the labor market is further softened.
In public comments and interviews, several officials have sent a clear signal that discard the interest rate cuts that would act as an insurance policy against any economic deceleration induced by the rate.
“I think that investors in the USAs and worldwide are trying to determine which is the new normality in the United States” and the Fed has “zero capacity to affect that destination,” Kashkari told CBS.
“All we can do is maintain anchored inflation expectations and handle some of the ups and downs on that trip,” he said.
When asked if the markets are ordered, Kashkari replied: “They are”, and added that the volatility is to be expected since market participants “understand where all this is that this will resolve.”
“But the markets are working, the transactions are happening, so I anticipate that it will continue,” he said.
This story was originally presented in Fortune.com
