Barkin OKs Step Down In Pace Of Hikes But Stresses Fed Will Do What It Needs To Do

Familiar tones from Richmond Fed President Barkin (’24 voter) as he tells BBG that he is supportive of a rate path that is slower & longer, which results in potentially higher interest rates than what was previously foreseen.

• He points to the stubbornness of inflation as the driving factor for the Fed, while noting that a slowing of rate hikes is a better approach from a risk management perspective seemingly OK’ing a step down to a 50bp increment at the final FOMC of ’22 in the process.
• Barkin is also cognisant of avoiding economic damage that doesn’t need to be inflicted, but stresses that the central bank will do what it needs to do.
• Further out, he notes that inflation needs to be under control before there is any talk of loosening policy.
• All in all, this sticks to the central Fed narrative in that a slowdown in the pace of tightening is coming, but such a step doesn’t represent a pivot.