Richmond Fed Barkin:
Comfortable doing more on interest rates if demand does not slow
Is “comfortable doing more” on interest rates if the coming data doesn’t confirm a story that slowing demand is returning inflation to the 2% target.
Believes higher rates may create the risk of a more significant slowdown, but the experience of the 70s shows the Fed should not back off its inflation fight too soon.
The 2% target has served the Fed well for a generation.
Inflation has proved “stubbornly persistent,” and he is still looking to be convinced that weakening demand will control it.