Fed Governor Michael Barr signals more rate hikes needed to tame inflation
Federal Reserve Governor Michael Barr announced that additional rate hikes may be necessary to manage inflation. He indicated that while economic growth is strong, inflation remains above the target of 2%. The central bank recently raised the policy rate to a range of 3.75%-4.00%. Barr's perspective contrasts with the Fed Chairman, who has not provided guidance on future rates.
Federal Reserve Governor Michael Barr indicated on Wednesday that additional interest rate increases may be necessary to combat inflation, as reported by Reuters. The central bank had recently taken steps to adjust short-term borrowing costs, but Barr stated that risks to achieving the inflation target have increased while risks to employment have diminished, according to prepared remarks for a Chicago Fed housing conference.
Although Barr noted that the US economy remains robust and the labor market solid, inflation remains above the Federal Reserve's 2% target and is not showing signs of decreasing. Barr expressed that further policy adjustments are likely needed to bring inflation back to target in a timely manner. Last week, Fed policymakers unanimously raised the central bank's policy rate to a range of 3.75%-4.00%, with 16 out of 18 officials signaling that at least one more hike would likely be required before the end of the year.
Barr's comments contrast with Fed Chair Kevin Warsh's reluctance to provide forward guidance on the rate path.
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