The Federal Reserve The Fed can assess how much more it needs to do to bring inflation down to the 2% target when it has raised borrowing costs to a neutral level, Richmond Fed President Thomas Barkin said on Tuesday.
“Once we’re in the neutral rate range, we can determine whether or not inflation remains at a level that requires us to slow down the economy,” Barkin said in remarks prepared to give at a local North East, Maryland chamber of commerce. , adding that the Fed could avoid inducing a 1980s-style recession in its bid to slow inflation.
The central bank last week raised its benchmark overnight lending rate by half a percentage point and has become more aggressive in recent months in its bid to bring inflation, which is running at a 40-year high, closer to to your target.
“We will do what we have to do,” Barkin said, noting in his speech Fed Chairman Jerome Powell’s recent comments that 50 basis point hikes are on the table for the next two Fed policy meetings. in June and July.
There are some tentative signs that inflation has peaked, which policymakers at the Fed would welcome as they seek to avoid having to be more aggressive with rate hikes to rebalance the economy.
Economists expect a government report due Wednesday to show consumer price inflation slowed slightly in April. That said, the Fed’s preferred measure of inflation is still more than three times the central bank’s target.
However, the Russian invasion of Ukrainewhich has pushed up food and energy prices, and lockdowns in china to control the Covid-19 cases they remain a major source of uncertainty in assessing how long huge inflationary pressures will remain.