21 hrs ago
Fed official warns rate hike if inflation progress stalls
Michael Barr is an important official at the Federal Reserve.
He said interest rates might need to go up if prices keep rising too quickly.
The Federal Reserve wants inflation to move toward 2%.
Barr said officials can wait if new information shows inflation is slowing.
But he said they should act decisively if progress stops.
The article says oil prices, tariffs and demand for artificial-intelligence data centers are adding pressure to prices.
Three regional bank presidents already wanted higher rates at the July meeting.
Investors are watching a consumer-price report on September 11.
The Federal Reserve will meet again on September 15 and 16.
Federal Reserve Governor Michael Barr said rates could rise if inflation does not move convincingly toward the 2% target.
Barr said policymakers can wait for more evidence if data show inflation is moderating.
Persistent inflation has been linked in the article to higher oil prices, tariffs and demand from artificial-intelligence data centers.
Three regional bank presidents dissented at the July meeting in favor of raising rates.
The next key dates are the September 11 consumer-price report and the Federal Reserve meeting on September 15-16.
- Who
- Federal Reserve Governor Michael Barr, other Federal Reserve policymakers and three regional bank presidents who favored a rate increase.
- What
- Barr warned that the Federal Reserve may raise interest rates if inflation does not moderate sufficiently toward the 2% target.
- Where
- Barr delivered prepared remarks at an event in Washington.
- When
- Barr made the remarks Tuesday; the next consumer-price report is due September 11, followed by a Federal Reserve meeting on September 15-16.
- Why
- Inflation has remained above target for more than five years, while oil prices, tariffs and demand linked to artificial-intelligence data centers are contributing to price pressures.
Wait for More Evidence
Raise Rates if Progress Stalls
How to respond to inflation
Wait for More Evidence
Some Federal Reserve policymakers expect inflation to ease without additional monetary tightening, and Barr said officials could take more time if data show moderation toward 2%.
Raise Rates if Progress Stalls
Barr said policymakers should act decisively to raise rates if inflation does not moderate sufficiently.
Current policy debate
Wait for More Evidence
The case for waiting is based on the possibility that existing policy will eventually bring inflation lower.
Raise Rates if Progress Stalls
Three regional bank presidents dissented at the July meeting in favor of a rate increase, while other officials have called for more progress before becoming comfortable with the current stance.
Key facts
- Inflation target
- 2%
- Possible policy response
- Raise interest rates if inflation progress stalls
- July meeting dissenters
- Neel Kashkari, Beth Hammack and Lorie Logan favored a rate increase
- Next consumer-price report
- September 11
- Next Federal Reserve meeting
- September 15-16
- Additional employment topic
- Barr also discussed work barriers facing people with criminal records and entrepreneurship as a possible opportunity.
Quotes
Michael Barr
Federal Reserve governor speaking at a Washington event
“If trends in the data give me some confidence that inflation is moderating on a path to 2%, then I think we can take a bit more time to assess our policy stance. However, if inflation appears not to be moderating sufficiently, then I think we should act decisively to raise rates.”
livemint.com
Sources
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