President of the Federal Reserve Bank of Richmond, Thomas Barkin, said on Tuesday that once the Fed brings the interest rate back to neutral ground, they can decide if they need to slow the economy (i.e. raise interest rates into tightening territory), depending on the level of inflation, as reported by Reuters. The Fed’s policy path won’t necessarily trigger a recession, Barkin noted.
The official noted comments from Fed Chairman Jerome Powell that 50 bps rate hikes are on the table for upcoming meetings and said the Fed needs to get inflation under control. Returning inflation to the Fed’s target creates certainties that enable growth and support maximum employment, he said.
Demand in the US economy is strong and appears solid, Barkin continued, explaining that it is driven by healthy balance sheets of businesses and households.
Source: Fx Street
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