Fed Governor Michael Barr Indicates Further Rate Hikes Likely Needed
Federal Reserve Governor Michael Barr stated that further interest rate hikes are likely necessary to bring inflation down toward the Fed's 2% target. Speaking at a Chicago Fed housing affordability conference, Barr noted strong economic growth and a solid labor market but emphasized persistent high inflation as a concern. He mentioned that risks to achieving the inflation goal have increased while labor market risks have receded. Barr’s remarks contrast with those of Fed Chairman Kevin Warsh, who has avoided providing forward guidance on rate hikes. Last week, the Fed raised its policy rate to 3.75%-4.00%, and most policymakers signaled at least one more hike before year-end. Barr suggested he anticipates at least two additional increases but did not specify a timeline. Barr also highlighted housing affordability challenges due to high mortgage rates, with the average U.S. 30-year fixed-rate mortgage reaching over 7% last week.
Topics: Federal Reserve Inflation Interest Rates