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Barkin: "We Have Some Time To Get To A Neutral Position"


Doesn't really sound like Richmond Fed Pres Barkin is among the most hawkish dots on March's plot. Unlike his fellow FOMC-ers today, he didn't give much away in his speech today but doesn't seem to be an active advocate for a 50bp hike. He may be one of the 5 who eyed 175bp in tightening this year, though he seems much more patient than others to get rates up to neutral so could even be one of the 4 dots below 175bp.

  • "We have moved at a 50-basis point clip in the past, and we certainly could do so again if we start to believe that is necessary to prevent inflation expectations from unanchoring. But setting the right pace for rate increases is a balancing act — we normalize rates to contain inflation, but if we overcorrect, we can negatively impact employment, which is the other part of our dual mandate. And we have some time to get to a neutral position...while we could move faster, we are already having more impact than you might think" [via forward guidance]
  • "As we start to normalize rates, it is appropriate to start to normalize the balance sheet as well, and we will begin to do that soon....For me, it’s pretty simple: Our purchases reduced rates in a modest fashion; our reductions should have a symmetric effect and increase medium-term rates modestly, thereby supporting our desired rate trajectory."

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