Kashkari: US Fed Should Cautiously Intervene in the Market, No Immediate Action Needed

On Friday, April 11, local time, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, stated that the US Fed should only intervene in the market in truly emergency situations.

The aggressive trade policies of US President Trump have caused market turmoil, and investors are looking to the US Fed for a rescue. Kashkari's remarks are the most explicit statement so far from a US Fed official on whether they will step in to calm the volatility.

"Whether it's intervention by the US Fed or the Treasury, it should be done very cautiously and only when absolutely necessary," Kashkari said. "I think we should be very careful not to do anything that could be seen as the US Fed weakening its commitment to fighting inflation, and I believe the US Fed's commitment remains firm."

Kashkari served as a Treasury official during the 2008-2009 financial crisis, leading the "Troubled Asset Relief Program" (TARP).

He pointed out that the overall market operation remains stable, which is the US Fed's primary concern. Since Trump announced reciprocal tariff policies last week, the US stock market has experienced a significant decline, while US Treasury yields have simultaneously risen. This "anomalous" phenomenon may reflect a decline in investor confidence in the US market.

Typically, during periods of market turmoil, US Treasury yields fall as investors tend to shift funds into US Treasuries, which are seen as safe-haven assets.

Bond yields are inversely related to prices. When investors perceive higher risks in government bonds, they demand higher yields, corresponding to lower bond prices.

The yield on 10-year US Treasuries surged significantly this week, while the US dollar depreciated by more than 3% against a basket of major currencies.

Kashkari noted that recent market movements may indicate a shift in investor sentiment toward the US.

"The situation here is quite complex," Kashkari said. "US Treasury yields are rising, while the US dollar is weakening. Normally, if tariffs are increased, I would expect the US dollar to appreciate. But the fact that the US dollar is falling, I think, further supports the argument that investor preferences are shifting."

However, he also emphasized that, despite some market pressures, no major disruptions have been observed so far.

Kashkari does not have voting rights on the Federal Open Market Committee (FOMC) this year but will regain them in 2026.

He stated that, in the current environment, the focus remains on maintaining stable inflation expectations. This aligns with other policymakers' statements that the US Fed is unlikely to adjust interest rates until the direction of fiscal and trade policies becomes clearer.