Fed's Barkin Calls Inflation the "Troublemaker," Leaves Door Open to Further Rate Hikes

Richmond Fed President Tom Barkin said Tuesday that inflation remains the primary "troublemaker" for the Federal Reserve, with price risks outweighing full-employment risks, justifying the Fed's quarter-point rate hike last week and leaving further increases dependent on incoming inflation data. Barkin said at a Baltimore CFA Society speech that recent data show little improvement in the inflation trajectory. The PCE price index still runs more than one percentage point above the Fed's 2% target, with over 60% of its components rising more than 3% year-over-year. He added that resilient consumer spending and business investment suggest monetary policy may be less restrictive than expected. Barkin, currently a non-voting FOMC member set to gain a vote next year, said last week's move raising the federal funds rate to 3.75%–4% was appropriate. He remains open on the rate path, noting inflation could ease or prove stubborn. The Fed remains committed to returning inflation to its 2% goal.