MNI BRIEF: Fed Has Time To See If 'More Work' Needed - Barkin
Richmond Fed president says the U.S. economy has proven remarkably resilient.
Federal Reserve Bank of Richmond President Tom Barkin said Thursday he supported an interest rate pause at last week's FOMC meeting and will be watching the labor market for clues of better balance and moderating wages before deciding whether there is a need for further monetary tightening.
"The range of potential outcomes, to me, is still pretty broad. That’s why I supported our decision to hold rates steady at the last meeting," he said in prepared remarks. "We have time to see if we’ve done enough, or whether there’s more work to be done. The path forward to me depends on whether we can convince ourselves inflationary pressures are behind us, or whether we see them persisting. I will be watching the labor market closely for those signals."
Demand is still healthy, and, for many employers, the labor market still feels out of balance, he said in a speech to the Money Marketeers of NYU. "If good workers remain hard to find, wages could rise further, pressuring margins and prices in turn." (See: MNI INTERVIEW: Higher Rates Finally Begin To Bite US Firms)
The Richmond Fed president said the U.S. economy has proven remarkably resilient. "The Fed has raised rates 525 basis points in the last year-and-a-half to fight inflation and, yet, GDP remains solid, growing 2.1 percent in the second quarter."