The president of the Federal Reserve Bank of Richmond said there is a need for interest rates to increase further, arguing that the Federal Reserve’s benchmark interest rate was below normal levels, Reuters reported.
In a speech on the economy, Thomas Barkin said the economy continues to be strong enough for more hikes by the Fed to be warranted. Barkin has a vote on monetary policy this year.
"It is difficult to argue that lower than normal rates are appropriate when unemployment is low and inflation is effectively at the Feds target," Barkin said.
Although the Fed held interest rates steady during its meeting last week, the body’s statement on the economy’s strength supported projections of a rate hike in September.
Rates have been slowly increasing since 2015, and Barkin told reporters after his speech that this was a “sensible” approach.
Although Barkin described the labor market as “very tight,” he pointed out that wages were not increasing very quickly. Admitting that the reasons for this remain unclear, Barkin offered that this could be the result of slower growth in productivity at companies.
Barkin also said that concerns in the US over tariffs are rising following President Donald Trump’s moves to increase those on certain imports, which have promoted retaliatory measures for US exports.
"Certainly, tariff concerns are making people more nervous than they did a few months ago," he said.
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