MNI BRIEF: Fed Has Time To Assess Healthy Economy - Barkin

MNI (WASHINGTON) - Richmond Fed President Thomas Barkin said Thursday there is time for the Fed to wait and assess whether the healthy U.S. economy is gently cooling in a way that would allow for a steady, deliberate normalization of interest rates, or in a way that would require the Fed to "lean into" easing. 

Echoing San Francisco Fed chief Mary Daly's remarks Monday, Barkin said his contacts tell him hiring is slow but they are not firing employees. "The job hiring, the job growth, which was quite vibrant two years ago -- well above historic norms -- has settled down. We're still growing jobs, 114,000 last month, though maybe with the (Quarterly Census of Employment and Wages report) that'll get adjusted down, but we're still adding jobs," he said, noting there's normalizing wages, increased prime age labor force participation, and also a lot more labor supply than would have been expected a year or two ago. The unemployment rate unexpectedly jumped to 4.3% last month, prompting investors to price in sharply lower interest rates by year-end. 

Barkin also said "all the elements of inflation seem to be settling" and he is hopeful that it is going to continue. "I'm actually pretty optimistic that over the next few months we're going to see good readings on the the inflation side," he told the National Association for Business Economics, though he still sees upside medium-term inflation risks including to housing. (See: MNI INTERVIEW: Fed To Wait For Sept Despite Jitters-Stein)