“If there is one thing we learned in the 1970s, it is that the Fed can’t let inflation fester and expectations rise,” Richmond Fed President Thomas Barkin said.
The Federal Reserve shouldn’t stop raising interest rates for fear of a recession, said Richmond Fed President Thomas Barkin on Wednesday.
All the factors that influence higher prices – demand, supply, commodity and wage pressures – are easing, Barkin said, and, as a result, “the economy should get into better balance in the months to come.”Geopolitical risks continue, such as OPEC’s decision to cut oil production, he noted. “We have been mandated by Congress to maintain stable prices and we are doing what it takes to get inflation back to our 2% target,” Barkin said.
After that, traders expect quarter-point hikes at the first two meetings next year, bringing the benchmark rate to a “terminal” range of 5%-5.25%. Traders then see the Fed holding steady until November when the central bankers cuts the benchmark rate by a quarter-point.
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