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Fed's Kashkari: We're not going to keep interest rates low to help the government run up debt

Key Points
  • Minneapolis Fed President Neel Kashkari said the central bank doesn't take the national debt into consideration when setting interest rates.
  • He spoke with the U.S. IOU at $21.1 trillion, $15.4 trillion of which is owed by the public.
Neel Kashkari, president and chief executive officer of the Federal Reserve Bank of Minneapolis.
Andrew Harrer | Bloomberg | Getty Images

Government officials hoping that the Fed keeps interest rates low to help finance the ever-growing debt load might be out of luck.

Minneapolis Fed President Neel Kashkari said Thursday that national debt concerns are not a factor the central bank weighs when deciding rate levels.

"How the Treasury funds itself and how much they spend and what they spend on is not part of our deliberations," he said. "We're not going to keep interest rates low to make Treasury's job easy."

VIDEO5:5705:57
Fed's Neel Kashkari: This is not the time to raise interest rates

While the government continues to spend, the Fed continues to raise rates. The Federal Open Market Committee, of which Kashkari is not a voting member this year, in March approved another quarter-point hike to its benchmark rate, raising the target range to 1.5 percent to 1.75 percent.

At the same time, the national debt has surged to $21.1 trillion, of which $15.4 trillion is owed by the public. Critics of the central bank have alleged that near-zero rates made it easy for the government to run up the massive IOU.

However, Kashkari said the Fed in its deliberations does not consider the impact rates have on debt service.

"The fiscal situation is enormously important to our country," Kashkari said during a discussion. "We have to make tough choices, and so far we're not making those tough choices."

WATCH: Kashkari says wage growth most important jobs number

VIDEO4:3604:36
Fed's Kashkari: Wage growth most important jobs number