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Fed Governor Barr says persistent inflation keeps rate hike on the table

Barr said he would prefer holding rates steady while disinflation continues, but warned that renewed inflation pressure could make a hike necessary.

Reported · Written up by our desk · Central Banks

Federal Reserve Governor Michael Barr said inflation is still too high and cautioned that a rate hike could become necessary if price pressures do not moderate soon, according to FXStreet.

Barr indicated a preference for keeping interest rates steady while disinflation continues, noting that solid economic growth and a stable labor market have supported the case for patience.

He said persistent inflation above the Fed's target poses a significant policy risk, and he framed the issue as core inflation, the measure central banks focus on when it rises or falls relative to the usual target of around 2%.

Barr also tied the inflation outlook to currency effects, saying that higher inflation typically leads to higher interest rates and can support a stronger currency, as investors seek higher-return assets.

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