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Fed official Barkin says economy is firming and inflation risks persist
Barkin said last week’s rate hike to 3.75% to 4.00% range will help bring inflation back toward the Fed’s 2% target, with further hikes possible.
Richmond Fed President Tom Barkin said US economic conditions are firming, citing continued consumer spending and strength beyond the artificial intelligence boom, and warned that inflation risks continue to outweigh risks to maximum employment, according to Reuters.
Barkin said the Fed raised rates at its most recent meeting, and he added that the quarter-percentage-point hike “will help” restore inflation to the Fed’s 2% target. The Fed lifted its policy interest rate to a 3.75% to 4.00% range last week, Reuters reported, while investors expect more increases.
He argued that inflation is not limited to energy, tariffs, or other supply shocks that might fade on their own, adding that even “passing” shocks are proving more persistent than expected. Barkin said momentum is appearing outside data centers, with the defense sector “hot,” manufacturing contacts sounding more upbeat, and bankers describing healthy loan pipelines.
Barkin also cautioned against attributing high inflation to a handful of categories tied to the Middle East conflict or tariffs, noting that much of the Personal Consumption Expenditures Price Index is rising at a greater than 3% annual rate. He said additional hikes may be required and how many will depend on what comes next.