Fed Committed to 2 Percent Inflation Target Despite Rising Pressures

The Federal Reserve is reaffirming its commitment to the 2% inflation target, and some members are signaling potential tightening ahead. Richmond Fed President Thomas Barkin says the central bank will take action if necessary to bring inflation back down to this level. The current PCE reading stands at 3.5% year-over-year as of March 2026.

Barkin's latest remarks underscore a growing tension inside the Fed, with some members more hawkish than others on monetary policy. Inflation has spent over five years above the 2% target, and recent readings have been volatile. The most recent PCE print jumped to 3.5%, erasing months of slow improvement.

Barkin highlighted the need for additional tightening to address persistent price pressures. He described the current policy stance as 'a close call' in a July interview with the Wall Street Journal, indicating that interest rates may not be high enough to finish the job on inflation.