Thomas Barkin, President of the Federal Reserve Bank of Richmond stressed the need for further clarity on the inflation path before considering lowering interest rates.
“My personal view is let’s get more conviction before moving,” Bakin told reporters following an event in Richmond on Thursday.
He emphasized the importance of sustained and broad progress toward the Fed’s 2% inflation target before making any adjustments to borrowing costs.
Barkin, a voting member of the Federal Open Market Committee this year, believes that the current monetary policy is well-positioned and that the central bank has sufficient firepower to fight inflation.
When questioned about the possibility of a single rate cut followed by a pause, Barkin said the decision would depend on the economic conditions at the time. He also said that it might not be appropriate to provide guidance on the timing of future policy changes if current conditions remain.
“There are times where we will want to give forward guidance and have given forward guidance,” Barkin said. “This doesn’t feel like one of those times to me. It doesn’t feel like a forward guidance time.”
“At this moment it feels like if you made a cut, you made a cut, and then let’s see where the data takes you,” Barkin continued.
Last week, policymakers decided to keep interest rates steady within the 5.25% to 5.5% range, the highest in over two decades. Per the median projection, policymakers expect one rate cut in 2024 and four in 2025.
Earlier this week, Fed Governor Adriana Kugler pointed out several reasons for optimism that inflation is on course to meet the U.S. central bank’s 2% goal.
Specifically, Kugler said she believes that the current monetary policy is “sufficiently restrictive” to reduce price pressures without significantly harming the job market.
“If the economy evolves as I am expecting, it will likely become appropriate to begin easing policy sometime later this year,” Kugler remarked at the Peterson Institute for International Economics in Washington. She found the recent data encouraging, particularly a government report showing that consumer prices remained flat from April to May.
Though more progress is needed, Kugler maintained a positive outlook, saying the current economic conditions “are moving in the right direction.”