Fed’s Barr says policy needs recalibration, more adjustments likely
Federal Reserve (Fed) Governor Michael Barr said on Tuesday that “there is a need to recalibrate policy” and that the base case is that “further policy adjustments” are likely needed.
Federal Reserve Governor Michael Barr stated on Tuesday that the Federal Reserve's policy must be recalibrated and that further adjustments may be necessary. Barr's speech indicated that he anticipates GDP growth to increase to 2% in the second half of the year, despite the labor market currently being strong, driven by business investment and consumer spending.
Money markets have priced a 66% chance for a rate hike at the October meeting, with odds for an increase at 94% for the December meeting. Barr expects a slight improvement in GDP growth rate from its current 2% pace in the first half of the year. While risks to achieving the inflation target have grown, the risks to the labor market have decreased.
Barr emphasized the need to recalibrate policy, as the base case suggests that additional policy adjustments are likely needed.
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