Barkin Eyes Quick Move To Neutral

Richmond Fed President Barkin (’24 voter) has stressed the need to quickly adjust interest rates from a stimulatory level. He also noted that “how far we will need to raise rates, in fact, won’t be clear until we get closer to our destination, but rest assured we will do what we must to address this recent bout of above-target inflation.” Barkin then pointed to the risk of further inflationary pressures in the post-pandemic world (which presents communication challenges surrounding the labour market/inflation trade off), while highlighting the idea that “our efforts to stabilize inflation expectations could require periods where we tighten monetary policy more than has been our recent pattern.” He is also of the opinion that cementing those same inflation expectations may allow the U.S. economy to avoid a hard landing.