Fed Gov. Barr is speaking (voting member) and says:
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Uncertainty about both inflation and jobs warrants a cautious approach to any further interest rate cut
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Possible that tariffs have only a modest impact on inflation, but there are also risks of persistent inflation and rising inflation expectations
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Fed’s inflation goal faces significant risks, but also some factors that might mitigate those risks
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Expects core personal consumption expenditures price index over 3% at end of this year
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Skeptical that the Fed can completely look through tariff-driven inflation
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Two more years would be a long time for consumers to wait for inflation to return to 2%
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Low payroll growth could be a sign of worse to come, but sound continued growth and resilience could also lead to stronger hiring
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Rate cut in September was appropriate, current policy rate still modestly restrictive
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Since Fed’s September meeting consumer spending has been strong, stronger PCE inflation has been confirmed, and new tariffs announced
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Modest impact of tariffs on inflation so far likely means period of adjustment will continue longer as firms adapt
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Hard to judge at this point whether federal government shutdown will leave an imprint on overall economy
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Current outlook poses challenges for judging stance of monetary policy and deciding the right path forward
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Recent spending data suggest GDP growth remained strong in the third quarter
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Fact that job market balance is coming through slowing supply and hiring suggests vulnerability to shocks
Barr comes across as more hawkish (less dovish) than dovish:
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He clearly prioritizes inflation risks, downplays the case for further immediate easing, and stresses caution.
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His tone is not aggressively hawkish (he doesn’t call for hikes), but his skepticism about cuts and insistence on watching inflation make him hawkish-leaning neutral.
This article was written by Greg Michalowski at investinglive.com.