Fed governor Michael Barr backs raising rates if inflation does not moderate
At the Second-Chance Lending Forum in Washington, Fed governor Michael Barr said inflation remains too high and has been for over five years. He said that if inflation appears not to be moderating sufficiently, officials should act decisively to raise rates. The address was mainly about credit access; the policy passage stated a condition rather than a decision. American Banker reported that Barr voted with the July majority that held the funds rate at 3.5–3.75 per cent.
Economics & Markets··Night
Barr backs raising rates if inflation does not ease
Fed governor Michael Barr said at the Second-Chance Lending Forum in Washington that inflation remains too high and has been for over five years. He said that if inflation appears not to be moderating sufficiently, officials should act decisively to raise rates. American Banker reported the same condition and wrote that Barr said officials can take more time if the data give him confidence that inflation is moderating on a path to 2 per cent. He added that with inflation above target for a protracted period there is a risk of broader price pressures taking hold.[1], [2]
Barr voted in July with the majority that held 3.5–3.75 per cent
The Fed published Barr's remarks as mainly about credit access, with a short monetary-policy passage; Barr stated a condition rather than a decision. American Banker reported that Barr joined the nine-member majority at the July FOMC meeting that held the federal funds rate at 3.5–3.75 per cent. Barr said the economy is growing solidly and the labour market is stable.[1], [2]
Barr spoke as two-thirds of futures priced a quarter-point increase
American Banker wrote that Barr named tariffs, war in the Middle East and large-scale investment in artificial intelligence among the 2025 shocks, and that core non-housing services inflation remains elevated. As of Tuesday morning two-thirds of federal funds futures contracts had priced in a quarter-point increase. US Treasury Secretary Scott Bessent said on CNBC on Monday that supply-side shocks argued for the Fed to stay put. Barr said officials look to this week's jobs report and next week's consumer price index to set the stance.[2]
