WASHINGTON (Reuters) – Tight monetary policy is “unequivocally” slowing the U.S. economy, allowing the Federal Reserve to move “more deliberately” with any further interest rate increases, Richmond Fed President Thomas Barkin said on Thursday.
“I’m confident that our foot is unequivocally on the brake,” Barkin said in a podcast posted to the Richmond Fed’s website. “It just makes sense to steer more deliberately” as the U.S. central bank studies the impact of monetary policy on the economy but also watches to see if inflation continues slowing.
Barkin said that while inflation was “likely past its peak,” he felt the “core question” for the year is whether it is now in a sustainable decline.
“We have seen three good months on the inflation prints. I’d like to see them continue. Is inflation calming? That’s really the core question for this year,” Barkin said. He said he felt the decline so far had been “distorted” by some falling goods prices.
“We all know what people care about. They care about food and gas and shelter. Until we’re confident that the things people care about are under control, I think we’ve still got a ways to go,” said Barkin, who is not a voting member of the rate-setting Federal Open Market Committee this year.
He did not pinpoint his own sense of where the Fed might pause ongoing hikes to its benchmark overnight interest rate, a level his colleagues projected in December was likely to be in the 5.00%-5.25% range. The U.S. central bank last week raised that rate by a quarter of a percentage point to the 4.50%-4.75% range.
New projections will be issued at the end of the Fed’s March 21-22 policy meeting.
(Reporting by Howard Schneider; Editing by Paul Simao)