Fed's Barkin: The logic for raising interest rates may primarily revolve around rising inflation expectations

According to Odaily, Richmond Fed President Barkin stated that current corporate behavior still indicates they view high oil prices as a short-term disturbance, with little evidence so far suggesting this has led consumers to cut spending or change inflation expectations in a concerning manner. Barkin said on Tuesday, "My sense is that people are still looking at this through a short-term lens. Gasoline spending has obviously increased significantly, but other spending still appears quite healthy." Barkin mentioned that there are scenarios that could push Fed policy in either direction, but in his view, the logic for raising interest rates may primarily revolve around rising inflation expectations, a situation that would force policymakers to demonstrate their commitment to keeping inflation near the 2% target. He said, "The case for raising rates would center on inflation expectations finally starting to move up. But I don't see that breakthrough right now." In contrast, scenarios for cutting rates would include inflation quickly falling back to 2% from its current level about 1 percentage point above target, or a weakening labor market requiring support through rate cuts. (Jin10)