Federal Reserve Bank of Richmond President Thomas Barkin said he supported the central bank’s quarter-point interest-rate increase this month and favors similar moves going forward as officials work to quell inflation.
(Bloomberg) — Federal Reserve Bank of Richmond President Thomas Barkin said he supported the central bank’s quarter-point interest-rate increase this month and favors similar moves going forward as officials work to quell inflation.
“I like the 25 basis-point path,” Barkin told reporters Friday in Rosslyn, Virginia. It “gives us the flexibility to respond” to data as it comes in, he said, adding that he supported the move at the most recent policy-setting meeting.
“I am not a person who thinks that the way to operate monetary policy is to move quickly to a terminal rate and then pause,” he said, because that requires high confidence about how policy settings impact the economy.
Two of the Fed’s most hawkish officials this week signaled they may favor returning to bigger interest-rate hikes in the future. Fed presidents Loretta Mester of Cleveland and James Bullard of St. Louis said policymakers need to be open to bigger rate hikes going forward if economic conditions warrant.
US central bankers have seen interest-rate-sensitive sectors of the economy slow as a result of their aggressive tightening campaign which began a year ago. The benchmark lending rate has jumped from zero to a range of 4.5% to 4.75%. However, growth appears resilient, with the economy adding more than a half-million jobs in January alone, and inflation still running at 5% for 2022.
Fed officials stepped down the pace of increases to a quarter-point move at their meeting in early February from a half point in December and a series of four 75 basis-point hikes before that.
“Moving inflation back to target will require more rate increases,” the Richmond Fed chief said. “How many of those I think we will have to see.”
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