SAN FRANCISCO (Reuters) - With yields on U.S. 10-year Treasuries as low as they are, the Federal Reserve needs to be careful about raising U.S. interest rates further, Dallas Federal Reserve President Robert Kaplan said on Tuesday.
The low yields suggest markets expect "sluggish" growth ahead, Kaplan said, and while he is comfortable about where interest rates are now, "I think there's a point that if the 10-year Treasury rate stays at the level it's at, we've got to be very careful about how we remove accommodation."
Kaplan, speaking at the Commonwealth Club of California, also said now that the Fed has engineered two rate hikes this year it is time to wait for more evidence that recent weak inflation is indeed transitory, as Fed Chair Janet Yellen has said is likely.