Fed's Barr says more rate hikes likely to be needed to curb inflation
TLT•Federal Reserve Governor Michael Barr said further policy adjustments are likely to be needed to bring inflation to the Fed’s 2% goal, citing high energy prices and AI-related investment. Markets are betting heavily on a quarter-percentage-point hike at the Fed’s October 27-28 meeting.
1. Barr backs further hikes
Barr said he does not yet see a clear trend toward inflation returning to 2% in a timely way. “In my base case, further policy adjustments are likely to be needed,” he said, adding that inflation is too high while the labor market is solid.
2. Energy and AI pressures
Barr said conflict in the Middle East has lifted global oil prices, while the AI buildout has boosted demand for some high-tech goods and raised prices for businesses and consumers. He said AI investment is likely to support strong economic activity over the coming year, but the timing of productivity gains is uncertain and short-term labor-market disruptions may occur.
