Fed's Barr Says More Rate Hikes Needed to Combat Sticky Inflation

Federal Reserve Governor Michael Barr stated that additional interest rate hikes are necessary to bring down sticky inflation. In a speech in Chicago, Barr emphasized that 'further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion.'

Barr pointed out that the current inflation rate is above the 2% target and not trending toward it in a timely manner. He attributed this to various economic shocks over the past five years, including tariffs, the conflict in the Middle East, disruptions from Russia's war on Ukraine, and a surge in investment demand for artificial intelligence.

Others at the Fed have also expressed concerns about inflation, with Richmond Fed President Tom Barkin warning that supply-side shocks are not short-lived events. Chicago Fed President Austan Goolsbee emphasized that the central bank should not assume these shocks will dissipate on their own and stated that it is hard to see a credible path back to 2% inflation without evidence of fading pressures.