Fed's Barkin Hints at Support for "Gradual" Rate Hikes

Odaily Report: Richmond Fed President Thomas Barkin said that with low unemployment, solid economic demand, and inflation still elevated, gradual rate hikes are reasonable. Discussing the Fed's monetary policy tightening process, he said: "The direction of policy is fairly clear; the question is the pace of moving forward." Barkin believes the Fed has already signaled at its September meeting that it will take gradual action. "When policy is not clearly behind the curve and policymakers want time to gather more information from the economic environment and external environment, a gradual approach is reasonable."

Thomas Barkin said consumer spending has not contracted noticeably. Although the job market is in a state of low hiring and low layoffs, workers are still keeping their jobs. Barkin said consumers are showing considerable creativity in their spending.

He also noted that as the AI buildout drives a surge in investment, policymakers may need to take measures to curb this momentum. He said: "This kind of demand-side inflation is not a supply shortage problem, unlike the situation where the Iran war caused energy prices to rise. We will watch how long this pressure lasts. But if demand continues to surge, this may be a situation that requires measures to curb it."