The following is the transcript of an interview with Neel Kashkari, President and CEO of the Federal Reserve Bank of Minneapolis that aired on “Face the Nation with Margaret Brennan” on Aug. 23, 2026.
MARGARET BRENNAN: 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.
NEEL KASHKARI: Thanks for having me, Margaret. Great to be with you.
MARGARET BRENNAN: 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.
MARGARET BRENNAN: 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 U.S. but government bond yields all around the world.
MARGARET BRENNAN: No, and I appreciate as a central banker, you don’t 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 moves is that the bond market is catching up to the stock market, and the bond market is seeing a higher growth trajectory. If the- 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- the bigger driver.
MARGARET BRENNAN: 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 is supposed to, and- 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?
: Well, I just think you can look to the Congressional Budget Office, which makes forecasts of debt, U.S. debt and deficits for decades out into the future, and many Fed leaders have said for a long time that the debt trajectory is on an unsustainable path. I think ultimately it’s up to our fiscal actors. That’s the Treasury and the executive branch working with Congress to design a fiscal package that can change that and put it on a sustainable path. But obviously, you know, you said it a moment ago. That’s not the Fed’s role. The Fed’s role is to take whatever they decide to do, put that into our forecast of the economy, and then our job is to take that and get inflation back down to our 2% target and achieve our dual mandate goals. And my colleagues and I are all committed to doing so.
MARGARET BRENNAN: Right. And you have a meeting at the end of this week, I understand, out in Jackson Hole. But, I’m- 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- to making some decisions or cause the Fed to intervene?
: I don’t think so, right. As I mentioned a few moments ago, there’s every indication that the U.S. Treasury market is functioning as it should–
MARGARET BRENNAN: Okay.
: –that trades are taking place. That there’s liquidity in the market, and so that enables us to focus on the federal funds rate as our primary policy tool to get inflation back down. And so I think we have the freedom to do what we need to do to achieve our goals that Congress has assigned us.
MARGARET BRENNAN: Okay. At that last Fed meeting that was held, you dissented from the broader decision to hold interest rates steady. You said there have now been five years of persistently high inflation, and, sort of like, let’s get on with it was my understanding. You were saying let’s start to possibly raise rates. You mentioned a quarter of a percentage point. Are you still thinking that that’s necessary next month?
: Well, I want to get- more data has yet to come between now and our next FOMC meeting, so I don’t want to prejudge things. But what’s happening in the Middle East, the conflict with Iran, is now a big driver of what’s happening on inflation because, as you know, energy goes into every facet of the U.S. economy, and the longer that conflict, the more turmoil there is. The longer it goes on, the bigger effect it ends up having on the U.S. economy and on inflation. And even if it’s driven by geopolitical factors like that, ultimately it does affect inflation. Ultimately, it does have a bearing on the Federal Reserve’s mandate and so the longer that goes on, the less confident I am that inflation is going to return to target. You know, for- for five years we’ve been saying inflation is going to return to target in the next year or two. It just keeps getting pushed out. Eventually, we’re going to have to do more. And I’m not sure if we’re there yet, we need to see more data. But I don’t want to prejudge the next meeting. But I’m not feeling confident right now that inflation is heading back down to target in a short period of time.
MARGARET BRENNAN: And- and we should say that at that press conference, Secretary Bessent is expected to have tomorrow, he’s supposed to talk about switching to financial warfare, or I guess returning to where we were and maybe ratcheting it up with financial warfare against Iran. It seems that that’s the foot forward rather than military conflict. Does that change anything for you?
: I- I- it’s too soon–
MARGARET BRENNAN: Okay.
: –to know. I don’t know what the secretary will announce, and I don’t know what the implication will be for–
MARGARET BRENNAN: Yeah.
: –energy prices and commodity prices.
MARGARET BRENNAN: Yeah. Let me ask you as well about what we heard in the last few days about the trade tension with Canada. You are in Minnesota, key border state there. Prime Minister Carney said there will be new retaliatory tariffs rolling out next week on steel, dairy appliances, ag equipment, pulp and paper, electronics. You’ve got a lot of cross-border trade here. Do you have any indication how significant the impact will be?
: Well, Canada is an important trading partner for America. You know, we talked about the five years of elevated inflation that has largely been driven by what we call supply shocks. One of those supply shocks is the trade and tariff conflicts. And so to the extent that we can get to a new- a new normal, a- a- a level of- whatever the trade dynamic is going to be, once we can get to that steady state, then businesses can adjust, and the inflationary impact can fade into the background. The longer there’s back and forth on the trade front, just like the longer there’s back and forth in the conflict of Iran, the imprint in inflation end up being extended and delayed, and so that’s another factor to pay close- close attention to.
MARGARET BRENNAN: Right. Well, we will follow that, and we appreciate your insight as always. Neel Kashkari, thanks for joining us this morning. Face Nation will be right back.