Fed Flags Further Rate Hikes Amid Rising Inflation Concerns
Federal Reserve Governor Michael Barr said that further monetary policy adjustments are likely following last week's rate increase, as inflation remains above the Fed's 2% target and risks to price stability have increased.
Barr noted that 'given changes to the economy, we were out of position' and said that last week's 25-basis-point hike to a 3.75%-4% range was an adjustment in the right direction.
The Fed governor cited tariffs, the conflict in the Middle East, continued disruptions from Russia's war on Ukraine, and the surge in investment demand to support the AI buildout as sources of upward price pressure.
Barr said that economic growth is strong and the labor market is solid, but inflation is not clearly trending toward the Fed target in a timely way. He stated that risks to achieving the Fed's inflation target have increased, while risks to the labor market have receded.