WASHINGTON - Richmond Federal Reserve Bank President Thomas Barkin expressed reservations on Tuesday about the perceived easing of inflation, despite recent data showing a broader slowdown in price increases. Speaking at an event in South Carolina, Barkin analyzed October's core consumer price index (CPI), which excludes volatile food and energy costs, observing a modest rise of 0.2% from September.
Barkin attributed the deceleration in part to a correction of the inflated prices that arose during the pandemic due to demand surges and supply shortages. However, he underscored the persistent high inflation rates within the shelter and services sectors as ongoing concerns.
In his remarks, Barkin emphasized that businesses seem resilient in the current economic climate, showing a reluctance to reduce prices until facing significant economic deceleration. This caution reflects a broader sentiment of uncertainty regarding the future trajectory of inflation.
At the latest Federal Reserve meeting in New Orleans, Barkin supported keeping the benchmark lending rate between 5.25% and 5.5%, acknowledging that financial conditions are tightening with rates remaining restrictive. Despite signs of resilience in the economy, he anticipates businesses will only consider price reductions when pressured by slowing growth.
Investors have taken note of Tuesday’s inflation report and Barkin's insights, seeing little likelihood for further Fed rate hikes as policymakers gear up for their next meeting on December 12-13. The market's reaction suggests close attention to the central bank's assessment of inflationary trends and its implications for future monetary policy.
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