Barkin sees inflation risk but urges care on monetary policy
The Richmond Fed president says healthy demand keeps price risks elevated, while AI and spending uncertainty argue for caution.
Richmond Fed President Tom Barkin said Monday that resilient demand and broad-based business costs continue to put upward pressure on prices, while risks to spending make it wise to move monetary policy carefully.
In remarks prepared for the Greater Greer Chamber of Commerce in South Carolina, Barkin said that if the economy stays on its current path, the risk lies on the inflation side of the Federal Reserve's dual mandate. He was expressing his own view, not announcing a policy decision by the Federal Open Market Committee.
Strong demand, uncertain durability
Barkin described businesses that continue to invest and retain workers, and households that keep spending despite stretched budgets. He said firms report continuing cost pressure and are trying to pass on increases they had previously absorbed.
But he also pointed to risks from artificial intelligence. If AI underdelivers, business investment, asset prices and spending supported by wealth could weaken. If it displaces more workers than expected, employment and consumer spending could suffer instead.
His conclusion was conditional: healthy demand and elevated inflation make the direction of policy relatively straightforward today, but threats to that demand call for care. The speech did not specify a rate move or commit the Fed to an action at its next meeting.
