As inflation pressures broaden, Fed’s Barkin favours a gradual approach

The Fed’s direction of travel is “straightforward,” with the pace still in question, Richmond Federal Reserve President Thomas Barkin said during an appearance on SiriusXM Business Briefing on Friday.

Describing a gradual approach to interest rates as “a good way to go,” Barkin also relayed businesses’ concerns that cost pressures had become more widespread. After years of high inflation, he said, companies argued that they needed to increase prices.

Barkin Sets Out Policy and Inflation Views:

For the Fed, the direction of travel is "straightforward"; the pace remains the question

For now, proceeding gradually is a good course

American businesses face substantial cost pressures

After years of elevated inflation, businesses can more readily make the case for raising prices

Despite relatively flat incomes, consumer spending has proved surprisingly resilient

Supply chains have come under pressure from the surge in AI investment, adding to inflation

The demand-side inflation generated by AI investment is the kind of pressure the Fed can act against

According to business owners, demand is still solid; weakness is confined to non-profits and the housing sector

Cost pressures are widespread, businesses report

Plans are being drawn up by businesses to pass those costs on to customers