MNI BRIEF: Fed's Barkin Supports Slower, Longer Fed Funds Path

Richmond Fed President Thomas Barkin said Thursday he's supportive of a "shallower, potentially longer and potentially higher" path for the fed funds rate.

"I am in concept supportive of a path that is slower but longer and potentially higher," he told reporters after a speech to the Virginia Bankers Association and Virginia Chamber in which he endorsed a "deliberate" path for the Fed. "I do intuit that inflation is going to be more persistent than a simple drop down to 2%," he said, adding that some businesses he's talked to are gearing up for price increases in January.

Asked about how wage growth fits into the outlook for the fed funds rate, Barkin said he is questioning his contacts about wages and an "inflationary psychology" and how wage inflation may end up in consumer prices.

"I am a bit of show-me on wage inflation," he said. "I think that we're going to continue to see the pressures on the wage side, at least for the first quarter, but I do have a sense as I talk to employers that the pressures that were so serious a year ago on the labor side are easing, at least for professionals."