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Richmond Fed President Thomas Barkin mentioned that he is not in a place to pledge to any policy route with the existing volatilities. Barkin qualified the chance of lessening policy and reducing rates as "a forecasting query" which he is not yet prepared to react to. Atlanta Fed President Raphael Bostic also presented his remarks on Wednesday, arguing that he discerns economic development decelerating considerably and perceives inflation will decline even further in addition.
Richmond Federal Reserve President Thomas Barkin asserted Wednesday that policymakers ought to retain the option of raising interest rates if inflation doesn't indicate enough signs of decline. Markets generally expect that the Fed has concluded its rate-raising cycle and could initiate rate cuts at some point next year, however Barkin maintained he couldn't commit to any particular path with so much uncertainty in the air. He remarked to CNBC's Steve Liesman during an interview at the CNBC CFO Council Summit, “If inflation comes down naturally and smoothly, awesome, you know, there's no particular need to do anything with interest rates if inflation steps down. But if inflation is going to flare back up, I think you want to have the option of doing more on rates. I guess the bigger point is, there's no precision that anyone can point to at exactly what the level of rates that exactly handles inflation and exactly the way you want to handle it. So you're constantly trying to adjust on the fly as you learn more about the economy.”
Barkin spoke shortly after the Commerce Department reported that the economy had grown at an annualized rate of 5.2% in the third quarter. In spite of the growth, inflation persists above the Fed's annual 2% target, however it has displayed a progressive downward trend in recent months. The Fed’s main indicator of inflation, core personal consumption expenditures, revealed a 12-month rate of 3.7% in September and is likely to present a slightly lower reading in October. Moreover, futures markets indicate that the Fed could cut rates by as much as four times, or a full percentage point, in 2024. Fed Governor Christopher Waller claimed Tuesday that he'd consider cuts if the inflation data continues to show signs of progress in the next several months. Nevertheless, Barkin emphasized the fact that this is a forecasting question that he's not ready to answer, “I don't see it as a there's a right answer on rates or a wrong answer on rates,” he said, adding that he's “skeptical” about inflation and thinks it's going to remain “stubborn” ahead.
Atlanta Fed President Raphael Bostic offered his own commentary Wednesday, stating in an essay that he perceives economic growth to slow substantially and inflation to diminish further. He communicated, “Altogether, the research, data, survey results, and input from business contacts tell me that tighter monetary policy and tighter financial conditions more broadly are biting harder into economic activity. At the same time, I don't think we've seen the full effects of restrictive policy, another reason I think we'll see further cooling of economic activity and inflation.” Bostic went on to mention that his staff forecasts inflation to drop to 2.5% at the end of 2024 before regaining the Fed's 2% objective by the end of 2025. Both Bostic and Barkin will be rate-setting members of the Federal Open Market Committee in 2024.
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