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Richmond Federal Reserve President Tom Barkin said Tuesday that the central bank’s statement after their meeting a few weeks ago is best interpreted as giving officials the option to hike again in June or to pause.
“I liked the optionality that was implied in the statement we did after the last meeting, I think it gives you time… to say either there’s still more we need to do so let’s do more or its still okay to wait,” Barkin said, in an interview on Bloomberg Television.
Asked if he was leaning one way or the other, Barkin replied: “Put me down as tracking the information. We’ll make a call when we get closer to the meeting.”
The Richmond Fed president said there was a “plausible story” that demand will cool and banks will tighten credit and, in time, inflation will come down.
On the other hand, Barkin said he was still not convinced that inflation would move lower. He said companies are going to keep increasing prices until customers and competitors prove to them that they have to stop.
The number one lesson of the 1970s high inflation decade was that the Fed can’t quit too soon to battle inflation, Barkin said.
In a separate interview with Bloomberg on Tuesday afternoon, Chicago Fed President Austan Goolsbee said he would look for more data before making a decision about June.
“I think it is a mistake for us to commit our decisions weeks before the meeting. We’re still going to get a lot more information,” he said.
Goolsbee said it was “far too premature to be talking about rate cuts.”
Cleveland Fed President Loretta Mester also spoke Tuesday and suggested she thinks interest rates should go higher.
In a speech in Dublin, Ireland, Mester said she wanted to get the Fed’s benchmark rate to the point where there was an equal chance that the next move could be a rate hike or a cut.
“I don’t think we’re at that rate yet,” she said.
Earlier this month, the Fed raised its rate to a range of 5%-5.25%. Rates had been close to zero in March 2022.
U.S. stocks
DJIA,
SPX,
were lower on Tuesday while the yield on the 10-year Treasury note
TMUBMUSD10Y,
rose to 3.54%.
