Fed's Barkin says price pressures may not fade as fast as expected
inflation to its 2% target may take longer than expected to complete and limit how far interest rates can be cut, Richmond Federal Reserve President Thomas Barkin said on Wednesday.
In an interview with Reuters, Barkin said he supported the half-percentage-point rate cut the Fed approved last month and agreed the benchmark rate could fall perhaps by another half a percentage point by the end of this year to take account of how far inflation has declined.
But he said he was concerned inflation could prove sticky next year and prevent the Fed from cutting rates as far as investors and some of his colleagues expect, with the benchmark rate potentially being held short of the «neutral» level many policymakers expect to reach.
Beyond the next few months and into the second half of 2025, «I'm more concerned about inflation than I am about the labor market,» Barkin said, with a combination of continued solid demand and renewed tightness in the labor market making it hard for the Fed to travel the «last mile» in lowering inflation.
«I'm not talking about some big resurgence… But I do think getting stuck is a very real risk,» he said after a speech to an economic conference organized by the University of North Carolina Wilmington. «There are pressures out there which work against us getting the final mile done.»
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