Key facts
- Businesses face rising cost pressures and are willing to pass them on.
- Inflation is high, demand is solid, and unemployment is relatively low.
- Barkin will be a voter on interest rate policy in 2027.
Richmond Federal Reserve President Tom Barkin stated on Friday that the U.S. central bank's monetary policy direction is "straightforward" given high inflation and a solid economy, though the pace of future rate increases remains uncertain. He noted that businesses are experiencing significant cost pressures from various inputs, including fuel, chips, and labor, and are increasingly inclined to pass these costs onto consumers. Barkin suggested that this lived experience of inflation could influence future inflation expectations unless the Federal Reserve takes action. Investors anticipate another quarter-point rate hike at the Fed's December meeting, following this week's decision to hold rates steady but with a policy statement signaling potential future increases. Barkin, who is not a voter this year, will become a voter in 2027.