Fed's Barr Signals Need for More Rate Hikes After Last Week's Move

Federal Reserve Governor Michael Barr said Wednesday that last week's rate increase was only a step toward recalibrating monetary policy, signaling more hikes may be needed to bring inflation back to the central bank's 2% target. Speaking in prepared remarks at a Chicago Fed housing affordability conference, Barr cited strong economic growth, a resilient labor market, and inflation still above target with no clear downward path. His use of the plural "further policy adjustments" suggests he may see at least two additional increases, though he gave no timeline. The Fed unanimously raised its policy rate by a quarter point last week to 3.75%-4.00%, with 16 of 18 officials projecting at least one more hike by year-end. Barr's explicit guidance contrasts with Fed Chair Kevin Warsh's refusal to offer a rate path. CME FedWatch data showed market odds of an October hike at about 55%, up from 9% a month earlier. Barr added that the average 30-year fixed mortgage rate rose to 7.12% last week, a more than two-year high.