Federal Reserve Official Barkin Optimistic about Economy’s Soft Landing
In a recent speech in Raleigh, N.C., Federal Reserve official Barkin expressed optimism about the U.S. economy’s potential for a soft landing. As a voting member of the rate-setting Federal Open Market Committee, Barkin highlighted the progress the economy has made, with inflation gradually returning to normal levels while the economy remains healthy.
Despite inflation rising 2.6% in November from a year ago, Barkin pointed out that the Fed’s preferred measure of personal consumption expenditures prices is at 1.9% on a six-month basis, below the Fed’s 2% target. He compared the Fed’s role in managing the economy to that of a pilot bringing an airplane in for a landing, acknowledging the risks involved in the process.
Barkin’s remarks come in the wake of the FOMC’s decision to hold interest rates for the third consecutive time, indicating a cautious approach to monetary policy. While market pricing suggests a more aggressive path for rate cuts, the FOMC has projected three quarter-percentage point rate cuts in 2024, a notable policy pivot from previous hikes.
Looking ahead, Barkin acknowledged the potential for additional rate hikes to combat above-target inflation, emphasizing that stimulating demand in interest-sensitive sectors like housing may not be the solution to inflationary pressures.
Barkin’s speech coincides with the release of minutes from the FOMC’s December meeting, offering additional insights into policymakers’ perspectives on future rate decisions. As the Fed continues to navigate the uncertain economic landscape, Barkin’s cautious optimism reflects the ongoing challenges and complexities facing the central bank in the pursuit of economic stability.