Fed’s Barkin favors gradual approach as inflation pressure spreads

On Friday, Richmond Federal Reserve President, Thomas Barkin, crossed the wires on SiriusXM Business Briefing. He said that the Fed’s direction of travel is “straightforward,” while noting that the question is the pace.

In the speech, Barkin said that a gradual approach – on rates – is “a good way to go.” He commented that businesses argued that cost pressure had broadened and that they need to raise prices after years of high inflation.

Key highlights:

Direction of travel is "straightforward" for the Fed, the question is pace

A gradual approach is a good way to go right now

A lot of cost pressure is hitting American businesses

In the context of years of elevated inflation, it is easier for businesses to argue they need to raise prices

Resilience of consumer spending has been a surprise given relatively flat incomes

The AI investment surge has pressured supply chains, and that is inflationary

AI investment is leading to demand side inflation, which is the kind of thing the Fed can lean against

Business owners say demand remains solid, with only weakness among non-profits and the housing sector

Businesses say that cost pressure is broad based

Businesses are laying plans to pass those costs on to their customers