(Bloomberg) -- In a recent interview, Neel Kashkari, the President of the Federal Reserve Bank of Minneapolis, expressed a confident outlook regarding market stability as investors navigate the complexities of President Donald Trumps evolving trade policies. Kashkari emphasized the importance of the Federal Reserve's role in anchoring inflation expectations during these uncertain times.

During his discussion on CBSs 'Face the Nation,' Kashkari highlighted a significant week in financial markets that saw a sharp rise in 10-year Treasury yields. He articulated that the trajectory of these yields is closely tied to US trade and fiscal policies, which are currently under scrutiny due to the President's approach to tariffs and international trade agreements.

At the Fed, our job is to keep inflation under control so that rate isnt even higher, Kashkari stated, underlining the central bank's commitment to managing inflationary pressures. This comes as the Federal Reserve's policymakers, including Kashkari, have indicated a willingness to maintain the current policy interest rate. They aim to mitigate the risk of inflation escalating due to tariffs imposed by the Trump administration, even in the face of potential softening in the labor market.

In his remarks, Kashkari conveyed a clear message that the Fed is unlikely to consider interest rate cuts as a preemptive measure against an economic slowdown that could be triggered by tariffs. I think investors in the US and around the world are trying to determine what is the new normal in America, he noted, indicating that the Federal Reserve has limited influence over this evolving economic landscape.

All we can do is keep inflation expectations anchored and manage some of the ups and downs on that journey, he added, portraying the Fed's focus on stabilizing expectations rather than reacting impulsively to market fluctuations.

When questioned about the current state of the markets, Kashkari assured viewers that they are functioning well despite inherent volatility. They are orderly, he stated, acknowledging that fluctuations are a natural part of the market as participants strive to understand the future direction of the economy. He expressed optimism, noting, But markets are functioning, transactions are happening, and so I anticipate thats going to continue.

This commentary from Kashkari reflects a broader sentiment among Fed officials, who are actively monitoring economic indicators while also being cognizant of the potential impacts of ongoing trade disputes. As the situation continues to develop, stakeholders in both domestic and international markets remain focused on how these policies will shape the economic landscape moving forward.

With insights from officials like Kashkari, it is clear that the Federal Reserve is committed to its dual mandate of promoting maximum employment and stable prices, even as external factors pose challenges to these objectives.

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