Top Fed officials nod to higher bond yields as cause for caution on rates

Leading Federal Reserve officials suggested on Monday that the increasing yields on long-term U.S. Treasury bonds, which have a direct impact on borrowing costs for both households and businesses, might deter the Fed from pursuing additional hikes in its short-term policy rate.

Instead, they could rely on financial markets to take on a more significant role in shaping monetary policy, effectively substituting formal moves by the central bank.

“We are in a sensitive period of risk management, where we have to balance the risk of not having tightened enough, against the risk of policy being too restrictive,” Fed Vice Chair Philip Jefferson said.

He highlighted the increase in U.S. Treasury yields and emphasized the importance of the central bank exercising caution when considering any additional hikes in the benchmark federal funds rate, Reuters reported.

READ MORE: https://finance.yahoo.com/news/nodding-rising-bond-yields-feds-173852424.html

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