Inflation not over: Interest rates likely to rise more, warns Fed Governor Michael Barr | Today’s news

On September 29, Federal Reserve Governor Michael Barr issued a warning. He said interest rates are likely to rise more. This is needed to slow inflation, he said.

Barr said the same thing last week. According to him, the economy is doing well at the moment. So slowing inflation is now a bigger concern. Fed officials are focusing more on the issue.

“In my base case, further policy adjustments are likely to be necessary to ensure that inflation falls to the target in time,” Bloomberg quoted Barr as saying.

“We want to promote sustainable, sustained growth to support maximum employment, and price stability is key to that,” he added in remarks prepared for the event in Detroit.

Inflation is far from the central bank’s 2% target

According to Barr, inflation remains somewhat outside the central bank’s 2% target.

“I don’t see a clear trend for a timely return to 2% yet,” Barr said.

“While inflation is well above the FOMC’s target, strong business investment and resilient consumer spending are supporting a solid labor market,” he added.

In September, Fed officials voted together to raise interest rates for the first time in three years. The rate now varies between 3.75% and 4%.

Another increase is expected this year

Officials also shared new rate forecasts after the decision. Most officials expect one more increase this year. Investors are also expecting a rate hike in October. Another hike could also come in December.

Barr described the economy’s growth rate as solid right now. He expects growth to accelerate further soon. Low unemployment should help this growth continue.

What he said earlier about rate hikes

In earlier remarks on Sept. 23, Barr said the Fed’s quarter-percentage-point hike was an important step in “recalibrating” short-term borrowing costs as policymakers sought to bring inflation back to its 2% target.

Risks to the Fed’s inflation target have increased, he said, while risks to the labor market have receded. Although U.S. economic growth remained strong and the labor market solid, inflation was still above the central bank’s target and had not started to trend downward clearly.

“Because of the changes in the economy, we weren’t in a position to make an adjustment in the right direction,” Barr said, referring to the rate hike.

Barr added that the Fed wants to support sustainable, sustained growth and maximum employment while maintaining price stability.