Economics
Fed Keeps Wary Eye on Yield Curve While Signaling Hikes on Track
- George worries an inverted curve is a financial stability risk
- Kashkari says flatter curve sheds clues on where neutral lies
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Inversion of a key part of the yield curve has caught the attention of some at the Federal Reserve, but officials show no sign of ditching plans to keep raising interest rates to get inflation under control.
The U.S. two-year yield briefly exceeded the 10-year on Tuesday for the first time since 2019, inverting yet another segment of the Treasury curve and reinforcing the view that rate hikes may cause a recession. The spread later went back to being slightly positive on Tuesday and remained so on Wednesday.