Barkin: US Economy Firming Up Amid Inflation Risks

Federal Reserve President Tom Barkin said that the US economy is firming up rather than weakening, citing sustained consumer spending and strength extending beyond the AI boom. He emphasized that inflation risks outweigh employment risks, which was why the central bank raised rates last week.

Barkin noted that even temporary shocks such as the Middle East conflict and tariffs are producing persistent price pressures. He pointed to data showing that much of the Personal Consumption Expenditures Price Index is increasing at a rate greater than 3% annually.

The Fed's decision to raise rates was made with an eye on restoring inflation to its 2% target, Barkin said. He acknowledged that the question of whether additional hikes will be required remains open and that investors are anticipating further increases.