Key facts
- Barkin said the risk lies on the inflation side of the Fed's dual mandate.
- Barkin said inflation has been above the Fed's 2% target for nearly six years.
- Barkin said investors expect the Fed to raise rates at its December 8-9 meeting.
- Barkin said AI could underdeliver and curb investment, or overdeliver and displace workers.
- Barkin will become a voting member of the policy-setting committee in 2027.
Richmond Federal Reserve President Tom Barkin said on November 9 that the US central bank should move monetary policy "with care" as it works out a response to inflation, which he called its greatest risk. Barkin made the remarks in prepared text for delivery to the Greater Greer Chamber of Commerce in Greer, South Carolina, Reuters reported.
Barkin said businesses continue to face rising costs and plan to try to pass them along. After nearly six years in which inflation has been above the Fed's 2% target, he said "the risk lies on the inflation side of our dual mandate."
"With demand healthy and inflation stubbornly elevated, the appropriate direction of monetary policy is relatively straightforward," said Barkin, who will become a voting member of the central bank's policy-setting committee in 2027. He added that "it is wise to move policy with care" given risks that could hit the labor market and the Fed's maximum employment goal.
Barkin said the buildout of artificial intelligence technology was "particularly consequential" for that balance, pointing to large swings in technology stocks and in the probabilities attached to Fed rate increases in the days after the US midterm elections. If the technology "underdelivers," he said, it could curb business investment, stock prices and consumer spending, undercutting a source of growth and possibly raising unemployment. He added that AI "could overdeliver and displace more workers than expected."