Richmond Fed President Tom Barkin said the central bank should move carefully because inflation remains its main concern. Investors expect a rate increase at the December 8-9 meeting. Barkin also pointed to artificial intelligence as a risk to the labor market.
Richmond Federal Reserve President Tom Barkin said Monday that the Fed should proceed carefully with monetary policy decisions because inflation remains the primary concern. He was speaking to the Greater Greer Chamber of Commerce in South Carolina.
Barkin sees inflation risk ahead of the December meeting
Barkin noted that businesses continue to experience rising costs and plan to pass these increases to consumers. Inflation has stayed above the Fed's 2% target for nearly six years.
According to Investing.com, Barkin said "the risk lies on the inflation side of our dual mandate." He added that with demand healthy and inflation stubbornly elevated, the appropriate direction of policy is relatively straightforward, Reuters reported.
Barkin will become a voting member of the central bank's policy-setting committee in 2027. Investors currently anticipate the Fed will raise rates at its December 8-9 meeting.
Why Barkin points to AI and the labor market
Even so, Barkin emphasized the need for a measured approach, citing potential risks to the labor market and the Fed's maximum employment goal.
The expansion of artificial intelligence technology matters particularly for these considerations, Barkin said. Large movements in technology stocks and shifting probabilities for Fed rate increases after last week's U.S. midterm elections underscored the point.
Reuters reported Barkin's views on the technology's possible outcomes. If the technology underdelivers, it could curb business investment, stock prices and consumer spending, and possibly raise unemployment. Alternatively, he said, AI could overdeliver and displace more workers than expected.
Sources: Investing.com, Reuters
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