Fed's Barr says further rate hikes will likely be needed

Federal Reserve Governor Michael Barr highlighted on Wednesday the central bank's recent move to recalibrate short-term borrowing costs, aiming to curb inflation. He indicated that additional interest rate hikes might be necessary to accomplish this objective. Barr noted that while risks to inflation remain, those affecting the job market have diminished.

He emphasized that the US economy is thriving and the labor market is robust, but inflation is still above the Federal Reserve's 2% objective and does not appear to be decreasing rapidly. Barr suggested that further policy adjustments are likely to be required to bring inflation down to the target in a timely manner. At a unanimous decision last week, the Fed raised its policy rate to between 3.75% and 4.00%, and 16 of 18 policymakers expressed belief that at least one more rate hike would be needed this year.

While Barr did not specify when these hikes would occur, his remarks suggest that at least two more increases may be required. This stance contrasts with Fed Chairman Kevin Warsh, who has avoided providing any guidance regarding the future direction of interest rates. Barr's detailed comments about monetary policy contrast with other Fed officials' reluctance to offer forward guidance.