Fed's Barkin Warns Inflation Remains Too High

Thomas Barkin, President of the Federal Reserve Bank of Richmond, warned on June 28 (local time) that inflation remains too high, making it unlikely to return to the target level without further monetary policy adjustments or other factors.
In an interview with Bloomberg at the Aspen Ideas Festival in Colorado, Barkin stated, "Inflation is too high," adding, "It is hard to be confident that inflation will return to 2% without further impact from the benchmark interest rate, the labor market, or other factors that induce disinflation."
He also expressed concerns regarding corporate pricing strategies in the current environment.
"Companies are factoring current inflation into their pricing, so I see some persistence in inflation," he added. "That is concerning, and that is one of the reasons why I think a 'modest tightening' is a reasonable position."
While companies are facing rising raw material costs, consumers are showing resistance to price hikes, which limits the extent to which businesses can pass those costs on to consumers.
Meanwhile, Barkin assessed that inflationary pressures from tariffs and oil price shocks are easing, which will help stabilize inflation.
However, he also noted that these two factors have not dampened American consumer spending, which remains strong.
He evaluated that in a consumer-driven economy, this could be an obstacle to bringing inflation down completely to the Federal Reserve's 2% target.
On June 18, the Personal Consumption Expenditures (PCE) price index, a key inflation gauge for the Fed, reached an annual rate of 4.1% in May, marking the highest increase since April 2023.
The war involving Iran has driven up prices for crude oil and other commodities, and inflationary pressures are continuing to expand.
Barkin stated that because both cooling and heating factors for inflation currently coexist, he intends to monitor future economic data carefully before making decisions on monetary policy.
He added that while the recent ceasefire agreement between the U.S. and Iran has led to a drop in oil prices and a sharp decline in gasoline prices—a factor that helps lower inflation—there are other variables contributing to inflation, such as the expansion of artificial intelligence (AI) infrastructure. Therefore, it is necessary to observe how the economy unfolds over the coming months to determine the appropriate policy direction.
(Photo: Getty Images)
※ Please note: This article was translated by AI and may contain errors.