Nov 7 (Reuters) - The recent surge in U.S. Treasury

yields has less to do with a concern in the bond market over

inflation risks arising from an aggressive fiscal agenda from

President-elect Donald Trump than they do about expectations for

stronger growth ahead, Federal Reserve Chair Jerome Powell said

on Thursday, but central bank officials will keep a close eye

for any change in that dynamic.

In the weeks between the Fed's first interest rate cut in

September and a second one announced on Thursday, yields have

risen to their highest levels since mid-summer - an unusual

behavior given the Fed is now lowering rates and expects to

continue doing so into next year.

Yields on 2-year Treasury notes, which ordinarily track Fed

policy expectations, have climbed by more than 65 basis points

since the central bank's 50-basis-point rate cut on Sept. 18,

and benchmark 10-year Treasury note yields, influenced more by

growth and inflation expectations, are up by 70 basis points.

Asked at a press conference following Thursday's second cut

of 25 basis points whether he found the bond market's behavior

concerning at all, Powell said "It appears that the moves are

not ... principally about higher inflation expectations."

"They're really about a sense of more likely there is

stronger growth and perhaps less in the way of downside risks,"

Powell said.

The Fed does take financial conditions into account in

policy-making "if they are persistent and they're material,"

Powell said. "But I would say we're not ... at that stage right

now. It's just something that we're watching."

Related measures in the bond market of inflation

expectations have moved higher alongside the yield increase,

however.

The breakeven-inflation yields on 5-year Treasury

Inflation-Protected Securities, for instance, have climbed to

their highest in more than six months. They have snapped higher

after finally returning to below 2% - the level of the Fed's

inflation target - during August and September as confidence had

grown that the Fed's rate hikes had tamed inflation.

Powell also said he was not overly concerned - yet - about

that increase.

"We would be concerned if we saw, if you thought we saw,

longer-term inflation expectations anchoring at a higher level,

that's not what we're seeing," he said.