Source: Fortune
Summary
Federal Reserve Bank of Richmond President Tom Barkin expressed concern over high inflation, citing the personal consumption expenditures index’s 4.1% rise in the year through May. Barkin sees tentative signs of moderation, but notes that inflation is widespread and not just driven by the war in Iran. He mentioned a decline in gasoline prices in his district and the build-out of artificial intelligence infrastructure as contributing factors. Barkin also expressed concern about businesses’ behavior in the current inflationary environment and the persistence of inflation.
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The numbers tell one story.
Tom Barkin’s concerns about inflation are clear, but his acknowledgement of tentative signs of moderation is a familiar refrain. The Richmond Fed chief’s emphasis on the persistence of inflation and businesses’ behavior in the current environment suggests that the Fed may need to take a more restrictive approach. The mention of artificial intelligence infrastructure as a contributing factor to inflation is a new twist. Barkin’s comments come as the Fed left interest rates unchanged earlier this month, but with an increasing number of policymakers warning that rates may need to be raised to reverse the pickup in inflation.
Barkin’s words sound like a message to businesses: don’t get too comfortable with high inflation.
Author: Evan Null
