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Fed Barkin. Would like to see a period of sustained inflation under control

Date:

Richmond Fed Pres. Barkin speaking on CNBC

  • Would like to see a period of sustained inflation
  • Would like to see inflation running at target for some time
  • There is more tightening to come to get rates into restrictive territory
  • The economy is in a fundamentally sound place
  • Inflation is being driven by commodity prices, supply chain issues, demand
  • I want to see real rates across the curve to be sustained in positive territory
  • Need to sustain them there and follow through with expectations on rate hikes
  • Demand is definitely softening. Businesses that benefit from Covid are seeing levels come back to normal
  • Demand for hire and services is still strong
  • Consumers really dislike inflation
  • Inflation is exhausting, unfair, creates uncertainty
  • Try to get inflation down on sustained basis and then can talk about what you do with rates
  • If you can get inflation to target for a number of months, that’s what would like to see (the target is 2%)
  • Not every recession is like the great recession; there have been a lot of modest recessions
  • We’ve got a lot of time before September meeting (Not committing to 75 basis point hike)
  • Still have jobs, PCE and inflation reports before the next meeting
  • Will be watching the data and make up mind closer to meeting
  • Impact on mortgage rates and housing happened much quicker
  • To the extent the economy softens that would weaken job openings and unemployment rates
  • We’ll see how much demand will need to soften to get inflation under control
  • I don’t have any problem trying to normalize the balance sheet as rates rise

US stocks are relatively little changed during markets comments:

  • Dow Jones up 103 points or 0.31%
  • S&P up 24 points or 0.57%
  • NASDAQ index up 113 points or 0.89%

Looking at the debt markets, the 2 year yield has seen a move back to the upside since the Michigan report. The 10 and 30 year yields have moved more to the downside

  • 2 year yield 3.25% +2.7 basis points
  • 10 year yield 2.851%, -3.8 basis points
  • 30 year 3.127%, -5.2 basis points
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