Federal Reserve Bank of Minneapolis President Neel Kashkari said he's not seeing stresses in the Treasury market that would merit an intervention by the US central bank.
"I'm not seeing big dislocations yet, I'm seeing some stresses but markets seem to be adjusting OK so far," Kashkari said Friday in an interview with CNBC.
Kashkari said the Fed had the tools to respond if needed, but only in severe circumstances.
"The Fed or Treasury stepping in should be done reluctantly, should be done when it's only truly needed," he said.
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Treasuries and the US dollar typically act as safe havens during market turmoil, but in recent days investors have moved the other way. Yields, especially on longer-term debt, have surged while the dollar has plunged.
Kashkari oversaw the Troubled Asset Relief Program, an emergency funding measure operated by the US Treasury, during the financial crisis of 2008-09.
The Minneapolis Fed chief repeated his view that the potential inflationary impact of tariffs make the Fed less likely to lower interest rates, even in the face of a weakening economy. A slew of policymakers have expressed a similar sentiment in recent days.
Right now, given the high inflation of the past few years and price growth still above the central bank's 2% target, it's appropriate for the Fed to prioritize the inflation side of its mandate, Kashkari said.
"I think we should be very cautious about taking moves that potentially could demonstrate a weakening, which I don't believe is there, but a weakening of the Fed's commitment to get inflation all the way back down," Kashkari said. "We need to finish the job on inflation."
