MNI BRIEF: Fed's Barr Says Too Early To Call Soft Landing
Federal Reserve Governor Michael Barr on Wednesday said it is too early to call a soft landing in the U.S. as there is still much work to do to bring inflation down further, but there are signs there will be continued, albeit bumpy, disinflation.
"It's very early to say whether we'd end up with a soft landing or not end up with a soft landing," he said in Q&A at a NABE conference. "We've been able so far to see significant disinflation with a strong labor market ... but I would be very careful about where we are in that process and how much work is still to go."
The Fed governor and vice chair for supervision said he expects "goods deflation to continue, but to continue closer to zero than it is now" and "everything about the real time data suggests that we still have plenty of glide path going forward on the housing piece to see disinflation." Barr said he is also seeing easing in wage pressures to more sustainable levels. "When you bring those together, you get a story that is about the gradual disinflation process that we've seen. We don't need each of them to be a 2%. We're not targeting subcomponents for the economy, we need overall for the economy to come down to our target." (See: MNI INTERVIEW: Housing Inflation To Keep Fed Cautious-Fannie)