Fed's Barkin says US central bank's direction 'straightforward,' question is pace
TLT•Richmond Fed President Tom Barkin said high inflation and solid demand make the direction of monetary policy clear, while the pace of future rate increases remains an open question. Investors expect another quarter-point hike at the Fed's December 8-9 meeting.
1. Rate path and pace
Barkin said high inflation, solid demand and relatively low unemployment made the direction of US monetary policy “pretty straightforward,” but said a gradual approach would give policymakers time to learn. He said the Fed may need to raise rates again.
2. Business cost pressures
Businesses in the Fed's mid-Atlantic and southeastern district report rising costs and a willingness to pass them on, Barkin said. He cited diesel fuel, computer chips and skilled-labor wages, and said investment in artificial intelligence was boosting demand and prices.
3. Fed policy context
The Fed held rates steady this week, while its policy statement said the “accumulation of more information” would help determine the path of policy. Recent data showed economic growth and inflation both stronger than anticipated. Barkin is not a voter on interest-rate policy this year but will become one next year.
