Neel Kashkari, the President of the Federal Reserve Bank of Minneapolis, expressed confidence in the stability of markets as investors navigate President Donald Trump’s evolving trade policies. He emphasized that the central bank’s primary focus should remain on keeping inflation expectations stable.
Following a week marked by a significant increase in 10-year Treasury yields, Kashkari highlighted the influence of U.S. trade and fiscal policy on such financial indicators. In an interview on CBS’s Face the Nation, he stated that the Federal Reserve’s objective is to maintain control over inflation to prevent further increases in interest rates.
Kashkari, along with other Federal Reserve policymakers, indicated last week their readiness to maintain the Fed’s policy rate unchanged. This stance is intended to reduce the risk of a sustained rise in inflation resulting from Trump’s tariffs, even if the labor market continues to weaken.
Through public comments and interviews, several officials have clearly ruled out the possibility of interest-rate cuts as a precaution against any economic slowdown induced by tariffs.
Kashkari mentioned that investors, both in the U.S. and internationally, are attempting to understand the new economic norms in America. He reiterated that the Federal Reserve has no influence over the ultimate outcome of this situation but can only work to keep inflation expectations stable while managing the fluctuations along the way.
When questioned about market stability, Kashkari affirmed that markets are indeed orderly, acknowledging that volatility is a natural response as market participants try to predict future developments. He assured that market operations remain functional, with transactions continuing, and he expects this trend to persist.
