(Bloomberg) -- The jump in US Treasury yields above 5% on Monday set off renewed investor tumult but is unlikely to trigger concerns at the Federal Reserve unless the rise becomes more volatile or persistent.

Yields on 10-year Treasuries exceeded 5% for the first time since 2007 on Monday then retreated. They have surged a full percentage point since early August as policymakers signaled rates will stay higher for longer. For now, officials in the Federal Open Market Committee see the continued run-up in borrowing costs as a feature of their bid to tame inflation rather than a drawback, as tighter financial conditions help cool economic growth. 

“I don’t think the Fed puts a lot of weight on the 5% number itself, but the FOMC definitely is paying attention to the substantial rise in yields,” said Dean Maki, chief economist at Point72 and a former Fed researcher. “In the short term, it makes them more cautious because they know rising rates do have an effect slowing the economy.” 

Fed officials led by Chair Jerome Powell are poised to leave short-term rates unchanged for a second time next week, while keeping open the option of raising them again later. Powell and other Fed officials suggested last week that tightening financial conditions could aid the central bank’s efforts to temper growth to dampen inflation.

Powell on Thursday gave several possible explanations for the rapid move in yields, including investors’ focus on recent rapid growth, concerns about rising government deficits and the Fed’s quantitative-tightening program. He said if higher yields persist, they could reduce the need to hike “at the margin.”

The Fed has sometimes intervened in securities markets they regarded as not functioning well, as officials did during the start of the Covid-19 pandemic and during the 2007-09 recession.

“Markets are orderly, which would be the first thing policymakers would think about,” said William English, a professor at the Yale School of Management and a former adviser to Fed officials on policy strategy. “To the extent that they were close in terms of the decision to tighten further, that tightening of financial conditions might be enough to lead them to delay and see how markets play out.”

The Fed tends to monitor short-term moves in markets, watching to see if they persist, rather than reacting quickly.

“Given the volatility of financial markets in general, they tend to take on board such shifts only gradually,” said Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics in Washington who formerly worked at the central bank. “The Fed will watch all this carefully, but there is not much they can do right now.”

While there has been some uncertainty on exact triggers for the move, most members of the Fed’s policy committee agree it may be helpful in offsetting price pressures and consistent with the goal of tighter conditions.

Read More: Fed Leaders See Rise in Yields as Possible Substitute for Hike

“Financial markets are tightening up and they are going to do some of the work for us,” Governor Christopher Waller, who has been among the most hawkish policymakers, said on Oct. 11.

The rise in yields translates into higher borrowing costs for households, businesses and governments. In the US, the 30-year fixed rate on mortgages has surpassed 7.8%, compared with about 3% in 2021. 

“The surge in long-term rates is boosting everything from mortgage rates to corporate and municipal bond yields,” said Diane Swonk, chief economist at KPMG LLP in Chicago. “At the same time, we will be hitting a wall of credit due to reprice in the corporate sector as we move into next year.”

US economic growth probably sped up in the third quarter to around 4.5%, according to economists surveyed by Bloomberg News. The report is due Thursday. While Fed officials have cited yields as being one of a number of reasons for growth to slow in the current quarter, they will likely want to keep open the option of hiking again as soon as December.

Markets were pricing in nearly 40% odds of an increase by the Fed’s January meeting.

“The robust third-quarter growth number will make the Fed a little bit concerned that maybe growth is too strong,” Maki said. “They have not ruled out further rate hikes.”

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