Thomas Barkin, president of the Federal Reserve Bank of Richmond, told Bloomberg on Tuesday that he would be comfortable with more rate increases if that’s what is needed to bring inflation down, per Reuters.
Key takeaways
“I like the optionality implied in the statement from last meeting.”
“Deposit flows are stable at banks in my district, encouraged by the resilience I’ve seen.”
“Commercial office sector is where you hear the most concern.”
“Most people I talk to anticipate a downturn over coming quarters.”
“When it comes to downsizing, businesses are quite cautious, reluctant to let staff go.”
“Businesses will not give up pricing power unless they’re forced to do it.”
Market reaction
The US Dollar Index clings to modest recovery gains slightly above 102.50 following these comments.
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The Federal Reserve’s Chief in the US, James Bullard, recently spoke on the issue of inflation and the possibility of implementing more congressional actions to clamp down on it.
On a CNBC interview, Bullard told reporters that if increasing interest rates is required to bring decrease the level of inflation, he was comfortable with the prospect. He qualified this statement by saying that it is important to ensure that inflation moves within the band that is targeted by the Federal Reserve.
Bullard also stated the recent increase in the number of Americans employed and the decrease in unemployment was positive news. This news, he said, highlighted the government’s success in stimulating the economy and providing relief to those affected by job loss during the pandemic.
In addition to discussing inflation and the American workforce, Bullard said the Fed is carefully watching the developments in the global economy. He highlighted the risks that past lockdowns may have had on the global economy and said that the Fed is reviewing all possible strategies to prevent any further disruptions.
Bullard concluded the interview by noting the Fed remains committed to playing a major role in highlighting the positive aspects of the US economy. The Fed’s chief said that the current state of the economy is also relatively strong despite the pandemic, and that the Fed will continue to monitor the situation and respond accordingly if needed.
