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Fed’s Barkin says rate hikes need to continue until inflation holds at 2%


Despite positive inflation data this week, Richmond Federal Reserve President Thomas Barkin said on Friday that more rate hikes are needed to ease price pressures.

This week’s release shows that consumers and wholesalers slight increase in price in July was “very welcome,” Barkin told CNBC’s “Squawk on the street“in a face-to-face interview.

“So we’re happy to see inflation starting to fall,” he added. But he noted that, “I would like to see a period of sustained inflation under control, and until we do, I think we will have to keep moving rates into territories.” limit.”

Title Consumer prices remained unchanged in July while Producer prices fell by 0.5%according to the Bureau of Labor Statistics.

However, that is only one month’s data: CPI is still up 8.5% year-on-year and producer price index is up 9.8%. Both numbers are still far above the Fed’s long-term 2% inflation target, so Barkin said the central bank needs to keep pushing until it’s reached.

“You want to see inflation run at our target level, which is 2% at PCE, and I’d like to see it run at our target level over a period of time,” he said. The Fed uses as a preferred measure the consumer spending price index; June PCE titles run at 6.8% year on year while the core excludes food and energy at 4.8%.

Barkin’s comments reflect those of most Fed officials who spoke recently about rates.

Central banks have increase standard loan interest rate by 0.75 percentage points at each of its last two meetings. Markets are divided on whether the Fed will increase by 3/4 point in September or scale down by half a point, with traders leaning slightly to the back, according to CME Group data on Friday morning.

Whatever the case, Barkin said it’s important to take action now. He said his voters care deeply about inflation and want the Fed to act.

“Consumers really don’t like inflation, and one message that I get very clearly from wandering around in my area is ‘we don’t like inflation,'” he said.



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