Business news and discussion on TalkFuse.
Barkin sees interest rate hikes ahead, but at a gradual pace
Richmond Fed president Thomas Barkin expects the US central bank will need to raise interest rates further, but says the pace should be gradual because uncertainty and incoming data matter. His comments point to continued concern about inflation, even as the Federal Reserve waits for more information before deciding its next move.
The Fed’s benchmark rate is currently 3.75% to 4%, after officials held it steady at their latest meeting. Markets put the chance of a December increase above 80%, with another move expected in 2027; Barkin will join the rate-setting committee as a voting member next year. He also described policy as possibly slightly accommodative, said AI may add to price pressures before boosting production, and flagged more than $500 billion in this year’s hyperscaler debt issuance as worth monitoring for credit risks.
In short
- Barkin expects further US rate rises at a gradual pace.
- The benchmark rate remains at 3.75% to 4%.
- He flagged inflation and hyperscaler debt as risks.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Further gradual rate rises could help bring inflation under control and protect the Fed’s credibility, especially if price pressures persist. Moving cautiously while watching incoming data would let policymakers respond to inflation without tightening faster than the economy can absorb.
The case against
Holding rates steady, or delaying further increases, could avoid weakening employment and economic activity while the effects of earlier tightening are still working through the economy. With uncertainty about the data and the possibility that investment in AI will eventually expand production, raising rates too soon could unnecessarily restrain growth.
Business Economy Government Politics