Fed Presidents Discuss Economy Resilience and Inflation Concerns

The Federal Reserve Bank Presidents shared their perspectives on the economy and monetary policy in a recent conversation.

Fed's Barkin noted that federal deficits are adding to upward pressure on yields. He didn't elaborate further on this point.

In another part of the conversation, Fed's Kashkari discussed the resilience of the economy, stating 'I don't know how high rates need to go.' He also expressed his concern about inflation and mentioned that the Federal Reserve will take necessary actions to achieve its goal. Kashkari added that if AI proves to be as productive as expected, the investment cycle could persist for a long time.

Kashkari's implied Fed September 2-yr yield is around 4%. The conversation also touched on market developments, with the Japanese yen experiencing a surge but no information about intervention or rate checks was mentioned at this time.