The U.S. economy is ready for interest rate increases to control rampant inflation, Richmond Federal Reserve President Thomas Barkin said Monday.
With the Fed poised to start hiking rates in March and beyond, Barkin told CNBC in a live interview that tighter monetary policy is appropriate. However, he didn't commit to how aggressive the central bank might be.
«I'd like the Fed to get better positioned. I think we've got a good part of the year to get there,» he said on "Closing Bell." «I think how fast we go just depends on how the economy develops.»
Financial markets, however, are expecting the Fed to move quickly.
Current futures pricing indicates a strong possibility of five 0.25% increases in the benchmark short-term borrowing rate. There's even about a one-in-three chance that the Fed could hike six times, according to CME calculations through its FedWatch Tool. Bank of America economists said Friday they forecast seven increases this year.
Those expectations come with inflation running at its highest level in nearly 40 years. The Fed uses interest rates to raise the cost of money and slow the pace of the economy, which had its fastest single-year growth spurt since 1984 a year ago.
Barkin said it's been his experience that at least for those in the business community, the rate increases will be welcomed.
«As I talk to participants in the economy, what I hear is they actually want us to do something now about inflation. They'd like us to get back to at least a normal interest-rate posture and not be simulating more demand on top of normal levels,» he said. «So, I don't hear much resistance to that.»
He spoke the same day as two of his fellow regional presidents, Mary Daly of San Francisco and Esther George of Kansas
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