MNI: Fed’s Barkin Not Relying On Long Yields As Eyeing Prices

Richmond Fed President Tom Barkin said Tuesday he's not relying on long-term interest rates to do the Fed’s job while watching inflation to determine whether officials need to raise rates again.

The Richmond Fed president told reporters after a speech it is "hard to square" recent data with what contacts have been telling him about the economy. "I've wondered questions like, 'will there be revisions in the data?' That's a wonder, that's not a prediction," he said. "The data is stronger than what I am seeing."

"Longer-term rates have moved up. That has certainly tightened financial conditions and you would assume that would have a corresponding impact on the economy," he said. "The challenge with depending on rates is they can move. You take them into account as you think about policy at any particular meeting but I don't really think of long-term rates as a policy variable because you could wake up six weeks from now and have a very different long-term rate structure."

"I try not to over index on that," he said about the recent move up in yields. "If you assume that at any future meeting that we have the same rate curve, then that would do some work. But I don't know that I know where long-end rates will be three weeks from now, given some of the stuff happening globally for example." (See: MNI INTERVIEW: Fed "Sweating" Yields But Lean To Hike- English)

Barkin said he will be patient and any decision about raising rates at the next meeting will be made then, as he focuses his attention on inflation. Asked about the most recent CPI report, he said: "You can't take any one report too definitively. These things do bounce around. You have to accept the six reports before that report had been strikingly good."