2026-02-03 13:05:00
Richmond Fed President Barkin is usually a good barometer on where the core of the FOMC stands.
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Rate cuts so far have helped insure health of job market while Fed completes “last mile” of returning inflation to target.
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Economy remains “remarkably resilient.”
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Given growth, low unemployment rate, hard to imagine either businesses or consumers moving to the sidelines.
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Rise in productivity suggests firms can bear higher input costs without pressure to raise prices.
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Firms say demand is fine and are not doing layoffs “at scale.”
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“Significant stimulus” arriving in the form of deregulation, tax and withholding changes.
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Inflation remains above target, expect more progress.
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Both job growth and spending have been narrowly focused in the economy.
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Sustained inflation miss since 2021 should be taken seriously, can influence inflation in the future.
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Slow growth in labor supply, given declining immigration and low fertility rates, is a top long-term concern.
The ‘significant stimulus’ arriving line is the most-notable for me, as it argues for keeping rates where they are as that’s digested. We saw a big jump in the ISM manufacturing survey yesterday and it was combined with transports and real-economy stocks surging. Could there be a turn in that part of the economy already?
Barkin will speak in a Q&A following the delivery of these comments so that should give us a better idea of where he sees rates heading.
