(Reuters) - The narrowing gap between yields on long-term and short-term Treasury bonds to little more than the equivalent of one rate hike from the Federal Reserve has helped sour at least one U.S. central banker on any further interest rates increases.

FILE PHOTO: California Republican gubernatorial primary candidate Neel Kashkari speaks on stage during the California Republican Party Spring Convention in Burlingame, California, U.S. on March 16, 2014 REUTERS/Stephen Lam/File Photo

Minneapolis Federal Reserve Bank President Neel Kashkari, who does not vote this year on Fed policy but takes part in the U.S. central bank’s regular discussion of interest-rate policy, said Monday that the flat yield curve means interest rates are close to neutral.

“This suggests that there is little reason to raise rates much further, invert the yield curve, put the brakes on the economy and risk that it does, in fact, trigger a recession,” he said in a blog post. “If inflation expectations or real growth prospects pick up, the Fed can always raise rates then.”

The Fed has lifted interest rates twice this year already, and last month signaled it will likely do so twice more before the year is out, in large part because unemployment, at 4 percent, is low by historical standards, inflation has begun to perk up, and stimulus from tax cuts and government spending are forecast to boost growth further.

Still, the gap between yields on the ten- and two-year Treasuries hit a fresh 11-year low earlier Monday and is currently around just 25 basis points.

(Graphic: The Incredible Shrinking Yield Curve - reut.rs/2NiIZy4[1])

A yield curve is said to invert when yields on short-term debt exceed...

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