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Federal Reserve monetary policy and inflation trends

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2026-09-20 19:02 UTC → 2026-09-21 13:14 UTC · added ~~removed~~

Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, has addressed concerns regarding US economic stability, specifically focusing on bond market yields and widespread inflation. In late August, Kashkari described the bond market as “orderly” and “functioning” despite rising long-term borrowing costs, such as the 10-year Treasury yield approaching 4.7%. He attributed rising yields to factors like increased government borrowing and capital expenditures in artificial intelligence, noting that the Federal Reserve’s role is to anchor inflation expectations rather than manage the yield curve. By late September, Kashkari shifted focus to the persistence of inflation, stating it remains “too high across all sectors,” with particular emphasis on the services sector. Following a unanimous Federal Open Market Committee decision to raise interest rates by 0.25 percentage points to a target range of 3.75% to 4.00%, Kashkari noted that while the central bank can combat inflation, it cannot directly influence geopolitical factors affecting oil prices. In September 2026, Federal Reserve officials warned that inflation remains a persistent threat, spreading into broader sectors beyond energy and food. Chicago Fed President Austan Goolsbee highlighted that supply shocks—driven by tariffs, supply chain disruptions, and geopolitical conflicts—are becoming regular features of the economy. Goolsbee cautioned that central banks can no longer treat these shocks as temporary, suggesting the path to price stability may require a “hard way” involving higher interest rates. Policymakers noted that if high demand persists alongside these supply-side pressures, further monetary tightening may be necessary.

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