Lates News

Richmond Federal Reserve President Barkin said that current corporate behavior still shows they believe high oil prices are just short-term disruptions and there is almost no evidence to suggest that this has led to consumers cutting back on spending or changing inflation expectations in a worrisome way. Barkin said on Tuesday, "My intuition is that everyone is still looking at this issue from a short-term perspective. Gasoline spending has clearly risen sharply, but other expenditures still look quite healthy." Barkin said there are scenarios currently that could push Federal Reserve policy in any direction, but in his view, the logic for raising interest rates may mainly revolve around rising inflation expectations, which will force policymakers to demonstrate their commitment to keeping inflation near the 2% target. He said, "The rationale for raising rates will revolve around the eventual start of an uptick in inflation expectations. But I currently do not see this breakthrough." In contrast, scenarios for lowering rates would include inflation quickly falling back from its current level about 1 percentage point above the target to 2%, or weakening job market needing support through rate cuts.