Barr Signals Possible Rate Hikes to Combat Persistent Inflation
Federal Reserve Governor Michael Barr warned that persistently high inflation would lead him to support further interest rate increases. Speaking at the Second Chance Lending Forum in Washington, Barr stated that if inflation does not show sufficient moderation, decisive action to raise rates would be appropriate.
Barr noted that inflation has remained too high for over five years, with recent figures showing a 3.7% annual headline increase, or 3.3% excluding food and energy. He mentioned that policymakers will have one more inflation report before their next meeting, as consumer and producer price indexes are due the following week.
The federal funds rate currently stands in a target range of 3.50% to 3.75%. Market traders assigned roughly two-in-three odds to a rate hike at the upcoming Federal Open Market Committee meeting, scheduled for September 15-16.