Kashkari: Inflation could be extended "the longer there's back and forth" in Canada tariff war
📅 Aug 23, 2026Face the Nation9 MIN6193 VIEWS19 SEGMENTS · 2 SPEAKERS
Neel Kashkari, the president and CEO of the Minneapolis Fed, told "Face the Nation with Margaret Brennan" that "the longer there's back and forth" in the tariff fight with Canada, "the imprint in inflation ends up being extended and delayed."
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What Neel Kashkari said
Written from the verified transcript and checked against it. Every figure links to the moment it was said.
Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said the record $40 trillion US debt is not an immediate crisis, noting 10-year Treasury yields at 4.7% are high relative to recent history but not versus the 1990s or early 2000s, with no signs of market dysfunction. He deferred to Treasury Secretary Scott Bessent on managing the debt market, emphasizing the Fed's role is controlling inflation. Kashkari dismissed concerns of a structural shift, suggesting bond yields could reflect optimistic AI-driven growth expectations. He reiterated the debt trajectory is unsustainable but fiscal policy is Congress's responsibility. He dissented from holding rates steady, citing five years of elevated inflation, and said the Iran conflict and Canada tariff back-and-forth could extend inflation, making him less confident it will return to target soon. He declined to prejudge the next FOMC meeting.
Key takeaways
Kashkari dissented from the Fed's decision to hold rates steady, citing five years of persistently high inflation.
He said the longer the Iran conflict and Canada tariff back-and-forth continue, the more extended inflation will be.
Kashkari said the $40 trillion debt is not an immediate crisis, with 10-year Treasury yields at 4.7% not high by historical standards.
He expressed less confidence that inflation will return to the 2% target in a short period.
He deferred to Treasury Secretary Bessent on managing the debt market, saying the Fed's role is inflation control.
4:03What are the things that people at home should be listening for that say America's debt load is really being dealt with now, that this isn't a problem?
5:14But I'm wondering how all these dots connect because do you think that this kind of activity and level of concern in the markets is going to make your job harder when it comes to making some decisions or cause the Fed to intervene?
6:01Are you still thinking that that's necessary next month?
Good morning and welcome to Face the Nation. Americans are waking up to an economy in uncharted territory. The country's debt hit a record $40 trillion last week and fears of persistent inflation and uncertainty about the Iran war sent financial markets reeling, driving borrowing costs, including those for the US government, to their highest levels in two decades. The Treasury Department intervened midweek to help, but by Friday the relief had evaporated. For everyday Americans, higher yields benefit savers, but they make mortgages and other loans more expensive. For more on what's next for the American economy, we're joined by Neel Kashkari, president and CEO of the Federal Reserve Bank of Minneapolis. Welcome back to Face the Nation.
So, when we spoke back in May, I asked you about the debt level America has. You said you didn't see an immediate crisis brewing, but at some point this is going to become a problem. We just hit $40 trillion. Are we at the point where this is a problem?
Well, Margaret, if you look at the Treasury yields, yields are high, 4.7% for example on the 10-year Treasury. They're high relative to recent history. They're not high relative to more longer American history. In the early 2000s, the 10-year Treasury and the 30-year Treasury were around these levels. In the '90s, they were meaningfully higher than they are now and there's no sign of Treasury market dysfunction or breaking down in financial markets. There are a lot of different factors that go into those Treasury yields. Inflation and the outlook for inflation is one of those factors. That's the Fed's job, but there are many other factors like it's the AI investment, government borrowing, economic growth. All of those end up going together to set these long-run Treasury yields.
But we saw this bond sell-off. We saw extraordinary action by the Treasury Secretary Scott Bessent to intervene. He said what was happening was due to traders having bad information. Is that what's happening?
Well, I'm going to leave it to the Treasury Secretary to manage the Treasury debt market. That's the job of the Treasury Department. The Fed's job is really to take care of the inflation piece of it. We are all absolutely committed to getting inflation back down to 2%, but long run, it's going to be fundamentals of debt issuance, of investment, of economic growth and productivity. Long run, that's what sets the Treasury yields, and not just in the US, but government bond yields all around the world.
No, I and I appreciate you as a central banker you want to get involved in fiscal policy or what the markets are doing day-to-day, but there is this debate right now about whether something more fundamental is shifting. Investor Mohamed El-Erian wrote in the New York Times, there's a breathtaking leap in the cost of borrowing. If it persists, it could mark the beginning of a structural economic shift more enduring and more globally consequential than most previous episodes of market volatility. Is that overstating things? Are we in the midst of a huge shift?
Well, there are a lot of different factors going on at the same time. So, the stock market, as you know, has been really bullish for the last several years, really excited about AI and the prospects that that will lead to productivity growth. You know, a more optimistic take on these market is that the bond market is catching up to the stock market and the bond market is seeing a higher growth trajectory. If the global economy is in for higher productivity growth and higher growth, you would also expect to see higher yields all around the world. Now, I'm not endorsing that view. I'm not saying that's right, but there are many different ways that you could see bond yields go up globally. It is Mr. El-Erian is right. These moves are happening all around the world at the same time. I think that there are negative views of what could be driving that. There are also more optimistic views. It's hard to know right now which is the bigger driver.
Well, the Vice President J.D. Vance in a TV interview said Secretary Bessent has a quote very discreet plan to shrink the nation's debt. Mr. Bessent is holding a press conference tomorrow or supposed to and he said he's going to do things about fiscal consolidation. What are the things that people at home should be listening for that say America's debt load is really being dealt with now, that this isn't a problem?
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Kashkari, N. (2026, August 23). Kashkari: Inflation could be extended "the longer there's back and forth" in Canada tariff war [Interview transcript]. Face the Nation. CEOInterviews.AI. https://ceointerviews.ai/interview/1247609/
MLA
Neel Kashkari. "Kashkari: Inflation could be extended "the longer there's back and forth" in Canada tariff war." Face the Nation, 23 Aug. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/1247609/.
BibTeX
@misc{kashkari2026_1247609,
author = {Neel Kashkari},
title = {Kashkari: Inflation could be extended "the longer there's back and forth" in Canada tariff war},
howpublished = {Interview transcript, Face the Nation. CEOInterviews.AI},
year = {2026},
month = {aug},
url = {https://ceointerviews.ai/interview/1247609/},
note = {Speaker-attributed transcript with timestamps}
}
