Thomas Barkin, President of the Federal Reserve Bank of Richmond, said that the Fed might increase interest rates beyond previous estimates if inflation continues to run too high. He stated that rates may or may not be raised further, depending on inflation levels. Recent data showed that consumer prices climbed 6.4% in January, still far above the Fed’s target of 2% annual inflation. Traders have priced in quarter-point increases at the March and May policy meetings and near-even odds of another one in June.
Inflation Persists: Borrowing Costs May Rise
Barkin of the Federal Reserve warns that if inflation persists at levels well above the Fed’s target, interest rates may have to rise higher than previously anticipated. If inflation settles down, borrowing costs may not need to rise as high. Recent data showed that consumer prices climbed 6.4% in January, still far above the Fed’s target of 2% annual inflation.
Fed Increases Policy Rate; More Hikes Promised
The Fed increased its policy rate by 25 basis points on February 1 to a range of 4.5% to 4.75%. The Fed promised ongoing rate hikes to counter high inflation. Traders have priced in quarter-point increases at the March and May policy meetings and near-even odds of another one in June. Fed officials will update their forecasts at the next meeting, which takes place March 21-22.
Barkin Speaks Out as Inflation Runs Too High
Thomas Barkin, President of the Federal Reserve Bank of Richmond, spoke about the possibility of the Fed raising interest rates beyond previous estimates if inflation continues to run too high. Recent data showed that consumer prices climbed 6.4% in January, still far above the Fed’s target of 2% annual inflation. Traders have priced in quarter-point increases at the March and May policy meetings and near-even odds of another one in June.
