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FED Senior Fellow Barkin Makes Important Statement on Interest Rates

Author: Content Editor
Richmond Fed President Thomas Barkin believes that closely monitoring economic developments and inflation is crucial in determining future rate cuts. He also highlights the potential for recent labor movements and geopolitical conflicts to increase inflation risks. Barkin considers the possibility of a low hiring and layoff labor market, but notes that an increase in demand could lead to an increase in labor demand as well. The Fed is currently assessing whether demand risks outweigh supply concerns, particularly focusing on the impact of low interest rates on home and auto sales. While the median expectation among FOMC policymakers is a 0.5 percentage point rate cut for the rest of the year, the Fed is not ready to end its anti-inflation measures and does not expect a significant decline in core Personal Consumption Expenditures until next year. Barkin suggests that the current interest rates are not in line with the decline in inflation and justifies the possibility of a 50 basis point rate cut in September.

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