We may have to raises rates further if the economy stays too strong

Minneapolis Federal Reserve Bank President Neel Kashkari said on Tuesday that he believes the US economy is headed toward a soft landing but warned that it is not yet time to declare victory. Such a scenario would involve the unemployment rate not rising sharply and inflation gradually moving towards the 2% target.

Speaking at a town hall hosted by Minot State University, Kashkari mentioned that the US economy has shown unexpected resilience. He cautioned that if the economy becomes too strong, the central bank may have to raise rates further. Kashkari described the recent increase in the 10-year Treasury yield as “perplexing.”

Market reaction

The US Dollar Index is falling for the fifth consecutive day, trading below 106.00, as US yields consolidate a recent decline.