Fed official Barkin warned inf shocks may take time to fade and said there is a
risk that inflationary pressures remain elevated and become entrenched. He said
last week’s rate hike should help slow inf but did not signal whether further
tightening is required; the timing and extent of any additional hikes remain
uncertain. Barkin emphasized supply shocks are no longer purely transitory and
are exerting persistent price pressure. He outlined two scenarios: one in which
recent shocks dissipate and price pressures cool quickly, and another in which
pressures persist or new cost shocks emerge, with stronger demand potentially
feeding through to prices. He added consumer spending may hit limits, investment
growth could slow and employment may become more volatile as these dynamics play
out. Barkin reaffirmed the Fed’s commitment to return inf sustainably to a 2%
target.
