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Fed's Barr: More Rate Hikes Likely Needed as Growth Picks Up

Bloomberg Markets •
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Federal Reserve Governor Michael Barr on Tuesday repeated a warning that further interest-rate increases will likely be needed to slow inflation. Barr’s outlook echoed comments he made last week when the Fed official made it clear a robust economy means slowing inflation is the bigger focus for policymakers.

“In my base case, further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion,” Barr said in remarks prepared for an event in Detroit. “We want to support sustainable, durable growth in support of maximum employment, and price stability is crucial to that.”

Barr added that inflation remains some way off of the central bank’s 2% target. “I don’t yet see a clear trend toward a timely return to 2%,” Barr said. Fed officials voted unanimously this month to raise interest rates for the first time in more than three years, bringing the benchmark federal funds rate to a range of 3.75% to 4%.

In a new set of rate projections, Federal Open Market Committee officials penciled in another increase before the end of the year. Describing the pace of economic growth as solid, Barr said he expects a further acceleration over the second half of the year, helped by low unemployment.