Fed Hawk Kashkari Says Treasury Market Functioning Normally Despite Yield Surge

U.S. Treasury yields have surged, but Neel Kashkari, president of the Federal Reserve Bank of Minneapolis and one of the Fed's leading hawks, said the market is still functioning normally.

Kashkari told CBS on Aug. 23 that there are "all the signs that the Treasury market is functioning normally." Trading is taking place and market liquidity remains intact.

That, he added, allows the Federal Reserve to stay focused on using the federal funds rate as its main policy tool to bring inflation back down.

The 10-year Treasury yield closed at 4.73% on Aug. 21. The 30-year yield stood at 5.28%, near its highest level since 2007.

Kashkari said current Treasury yields are high by recent historical standards. Still, he noted that yields were meaningfully higher in the 1990s.

Kashkari argued for a rate increase at the Federal Open Market Committee's July meeting. He was one of three officials who dissented at the time.

He also reiterated concerns about inflation and declined to comment on the September meeting.

"I want to see more data, but I don't want to prejudge the next meeting," Kashkari said. "At this point, I'm not confident that inflation will return to target in the near term."

Han Kyung-woo, Hankyung.com reporter case@hankyung.com