Central bank in ‘comfortable position’ amid falling inflation Reuters

© Reuters. FILE PHOTO: Federal Reserve Bank of Richmond President Thomas Barkin poses during a break at the Dallas Fed Technology Conference in Dallas, Texas, U.S., May 23, 2019. REUTERS/Ann Saphir/File Photo

By Michael S. Derby

(Reuters) – Richmond Federal Reserve Bank President Thomas Barkin welcomed the easing of inflation on Tuesday, but stopped short of saying how it would affect his outlook for the central bank’s interest rate policy next year in an interview with Yahoo Finance.

“I think we’re in a good position now, with the 3% inflation rate coming down and the 3.7% unemployment rate remaining relatively stable,” and whether the Fed can meet the rate cut forecasts revealed at last week’s policy meeting depends on how the economy performs , Barkin said.

The official was speaking on the heels of last week’s Federal Open Market Committee meeting, in which policymakers held rates steady between 5.25% and 5.5% and made three rate cuts in 2024, amid expectations that inflationary pressures that led to aggressive rate hikes will continue. to ease up.

The prospect of looser monetary policy sparked a rally in financial markets, even as a number of Fed officials, including New York Fed chief John Williams, tried to push back on the notion that a rate cut was assured.

Barkin, who will be a rate-setting Federal Open Market Committee vote next year, declined to say he would agree to rate cuts but indicated he was open to them if the economy performed as expected.

“We’re making good progress on inflation,” Barkin said, adding, “I think it just helps balance the perspective between the two sides of our mandate, inflation and employment.”

Barkin warned that the Fed’s forecasts are nothing more than a promise of action.

“We’re not done with inflation yet. I hope the numbers will come down in the coming months,” Barkin said. “If you assume that inflation is coming down nicely, then of course we would react appropriately,” he said, adding: “I’m not predicting what the data will do. We’ll see what happens.”

Barkin said that when it comes to investor expectations for rate cuts, “one of the things I’ve learned is that I don’t control the markets, so they’re going to do what they’re going to do.”