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"I
am pretty comfortable with what Jay (Powell) said. ...He gave a
range that feels pretty reasonable," Barkin said during a
webinar held by the National Association for Business Economics.
The Fed is poised to deliver another bigger-than-usual rate hike
at its next meeting in July as it seeks to tame inflation
running at more than three times its 2% goal, with fears growing
that the economy will tip into recession as a result.
Barkin repeated that the Fed will have to make monetary policy
restrictive, but said data and judgment would guide the central
bank as its tackles "high, broad based and persistent"
inflation.
"You really don't want to inadvertently break something and lead
to a significant pullback in the reactions of economic actors
that you weren't anticipating. It is a fine balance and I think
judgment plays a huge part," Barkin said, noting that he is
focused on trying to get to positive forward looking real, or
inflation-adjusted, rates.
Last week on the heels of another report that showed price
pressures escalating more than expected, the Fed raised interest
rates by three-quarters of a percentage point to a range of
1.50%-1.75%. It now forecasts borrowing costs will more than
double that level over the next six months.
Several policymakers, including some previously more wary about
sparking a sharp rise in unemployment, have backed the new
whatever-it-takes approach.
Powell's pledge of an unconditional war against price increases
that are draining American pocketbooks will be scrutinized by
U.S. lawmakers on Wednesday and Thursday during two days of
regularly scheduled hearings, held semi-annually, before
Congress.
Barkin said he remains hopeful that a lot of pandemic era price
pressures will ease and inflation start to ease in short order,
but gave no timeframe for when it might return to the central
bank's goal.
Research released by the San Francisco Fed on Tuesday showed
supply issues account for around half of the run-up in current
inflation levels, underscoring the difficulties Fed policymakers
face in taming inflation due to factors outside their control.
Critics contend that the Fed has been too slow to act to bring
down inflation which it argued last year was transitory. The
more aggressive fight needed to quash surging price pressures
will lead to a downturn as it cools demand across the economy,
they added.
The clamor for a repeat of last week's 75 basis point increase
in borrowing costs, the biggest hike in more than 25 years, has
already begun from some quarters. Fed Governor Christopher
Waller has called for the same sized move at the next meeting in
July, saying the central bank is now "all in" on restoring price
stability.
(Reporting by Lindsay Dunsmuir; Editing by Richard Chang and
Chizu Nomiyama)
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