Barr: Inflation Not Safe Yet, Fed Prefers to Wait
Federal Reserve Governor Michael Barr indicated that the US central bank will likely hold interest rates for some time, awaiting data confirmation that price pressures have truly eased. In a speech at the New York Association for Business Economics on Tuesday (February 17), Barr argued that the wisest course of action now is to allow time to assess economic conditions "as they develop."
Barr emphasized that he wants to see stronger evidence that goods price inflation is declining sustainably before considering further interest rate cuts—provided the labor market remains stable. The Fed itself already cut rates a total of 75 basis points last year, bringing the range to 3.50%–3.75%, then held the rate at its January meeting.
Although inflation has cooled from its peak, Barr believes the risk of inflation remaining above the 2% target remains significant, necessitating caution. He also mentioned tariffs as a factor that could disrupt the disinflationary path and hinder the smooth decline in inflation.
Regarding the labor market, Barr described conditions as seemingly stable but "fragile" and vulnerable to negative shocks. Regarding AI, he believes its adoption has so far triggered more role shifts within companies than a wave of layoffs, but the risk of short-term disruption still needs to be anticipated—and the "AI boom" doesn't automatically justify lowering policy interest rates.
Source: Newsmaker.id
